<PAGE>   1
                                                                     EXHIBIT 4.2



================================================================================


                              AMENDED AND RESTATED

                              DECLARATION OF TRUST

                                       OF

                             ENRON CAPITAL TRUST II


                          DATED AS OF JANUARY 13, 1997


================================================================================
<PAGE>   2
                              TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                     Page
                                                                                                                     ----
         <S>              <C>                                                                                          <C>
                                                        ARTICLE I
                                              INTERPRETATION AND DEFINITIONS

         SECTION 1.1      Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
                          -----------                                                                                    

                                                        ARTICLE II
                                                   TRUST INDENTURE ACT

         SECTION 2.1      Trust Indenture Act; Application  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
                          --------------------------------                                                               
         SECTION 2.2      Lists of Holders of Trust Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
                          ------------------------------------                                                           
         SECTION 2.3      Reports by the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
                          -------------------------------                                                                
         SECTION 2.4      Periodic Reports to Property Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
                          ------------------------------------                                                           
         SECTION 2.5      Evidence of Compliance with Conditions Precedent  . . . . . . . . . . . . . . . . . . . . . . 9
                          ------------------------------------------------                                               
         SECTION 2.6      Trust Enforcement Events; Waiver  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
                          --------------------------------                                                               
         SECTION 2.7      Trust Enforcement Event; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
                          -------------------------------                                                                

                                                       ARTICLE III
                                                       ORGANIZATION

         SECTION 3.1      Name  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
                          ----                                                                                           
         SECTION 3.2      Office  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
                          ------                                                                                         
         SECTION 3.3      Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
                          -------                                                                                        
         SECTION 3.4      Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
                          ---------                                                                                      
         SECTION 3.5      Title to Property of the Trust  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
                          ------------------------------                                                                 
         SECTION 3.6      Powers and Duties of the Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . .  11
                          -----------------------------------------                                                      
         SECTION 3.7      Prohibition of Actions by the Trust and the Trustees  . . . . . . . . . . . . . . . . . . .  13
                          ----------------------------------------------------                                           
         SECTION 3.8      Powers and Duties of the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . .  14
                          -----------------------------------------                                                      
         SECTION 3.9      Certain Duties and Responsibilities of the Property Trustee . . . . . . . . . . . . . . . .  15
                          -----------------------------------------------------------                                    
         SECTION 3.10     Certain Rights of Property Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
                          ----------------------------------                                                             
         SECTION 3.11     Delaware Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
                          ----------------                                                                               
         SECTION 3.12     Execution of Documents  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
                          ----------------------                                                                         
         SECTION 3.13     Not Responsible for Recitals or Issuance of Trust Securities  . . . . . . . . . . . . . . .  18
                          ------------------------------------------------------------                                   
         SECTION 3.14     Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
                          -----------------                                                                              
         SECTION 3.15     Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
                          -------                                                                                        

                                                        ARTICLE IV
                                                         SPONSOR

         SECTION 4.1      Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
                          -------------------------------                                                                
         SECTION 4.2      Indemnification and Expenses of the Trustee . . . . . . . . . . . . . . . . . . . . . . . .  20
                          -------------------------------------------                                                    

                                                        ARTICLE V
                                              TRUST COMMON SECURITIES HOLDER

         SECTION 5.1      Company's Purchase of Trust Common Securities . . . . . . . . . . . . . . . . . . . . . . .  21
                          ---------------------------------------------                                                  
         SECTION 5.2      Covenants of the Trust Common Securities Holder . . . . . . . . . . . . . . . . . . . . . .  21
                          -----------------------------------------------                                                
</TABLE>





                                       i
<PAGE>   3
<TABLE>
<CAPTION>
                                                                                                                     Page
                                                                                                                     ----
         <S>              <C>                                                                                          <C>
                                                        ARTICLE VI
                                                         TRUSTEES

         SECTION 6.1      Number of Trustees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
                          ------------------                                                                             
         SECTION 6.2      Delaware Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
                          ----------------                                                                               
         SECTION 6.3      Property Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
                          -----------------------------                                                                  
         SECTION 6.4      Qualifications of Regular Trustees and Delaware Trustee Generally . . . . . . . . . . . . .  22
                          -----------------------------------------------------------------                              
         SECTION 6.5      Regular Trustees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
                          ----------------                                                                               
         SECTION 6.6      Delaware Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
                          ----------------                                                                               
         SECTION 6.7      Appointment, Removal and Resignation of Trustees  . . . . . . . . . . . . . . . . . . . . .  23
                          ------------------------------------------------                                               
         SECTION 6.8      Vacancies among Trustees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
                          ------------------------                                                                       
         SECTION 6.9      Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
                          -------------------                                                                            
         SECTION 6.10     Meetings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
                          --------                                                                                       
         SECTION 6.11     Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
                          -------------------                                                                            
         SECTION 6.12     Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . .  25
                          -----------------------------------------------------------                                    

                                                       ARTICLE VII
                                                      DISTRIBUTIONS

         SECTION 7.1      Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
                          -------------                                                                                  

                                                       ARTICLE VIII
                                              ISSUANCE OF TRUST SECURITIES

         SECTION 8.1      Designation and General Provisions Regarding Trust Securities . . . . . . . . . . . . . . .  26
                          -------------------------------------------------------------                                  
         SECTION 8.2      Redemption of Trust Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
                          ------------------------------                                                                 
         SECTION 8.3      Redemption Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
                          ---------------------                                                                          
         SECTION 8.4      Voting Rights of Trust Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . .  29
                          -------------------------------------------                                                    
         SECTION 8.5      Voting Rights of Trust Common Securities  . . . . . . . . . . . . . . . . . . . . . . . . .  31
                          ----------------------------------------                                                       
         SECTION 8.6      Paying Agent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
                          ------------                                                                                   
         SECTION 8.7      Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
                          -------                                                                                        
         SECTION 8.8      Acceptance of Guarantee and Agreements, Limited Partnership Agreement.  . . . . . . . . . .  32
                          ---------------------------------------------------------------------                          

                                                        ARTICLE IX
                                         TERMINATION AND LIQUIDATION OF THE TRUST

         SECTION 9.1      Termination of Trust  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
                          --------------------                                                                           
         SECTION 9.2      Liquidation Distribution Upon Termination and Dissolution of the Trust  . . . . . . . . . .  33
                          ----------------------------------------------------------------------                         

                                                        ARTICLE X
                                                  TRANSFER OF INTERESTS

         SECTION 10.1     Transfer of Trust Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
                          ----------------------------                                                                   
         SECTION 10.2     Transfer of Certificates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
                          ------------------------                                                                       
         SECTION 10.3     Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
                          -----------------------                                                                        
         SECTION 10.4     Book-Entry Interests  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
                          --------------------                                                                           
         SECTION 10.5     Notices to Clearing Agency  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
                          --------------------------                                                                     
         SECTION 10.6     Appointment of Successor Clearing Agency  . . . . . . . . . . . . . . . . . . . . . . . . .  36
                          ----------------------------------------                                                       
         SECTION 10.7     Definitive Trust Preferred Security Certificates  . . . . . . . . . . . . . . . . . . . . .  36
                          ------------------------------------------------                                               
         SECTION 10.8     Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . .  36
                          -------------------------------------------------                                              
</TABLE>





                                       ii
<PAGE>   4
<TABLE>
<CAPTION>
                                                                                                                     Page
                                                                                                                     ----
         <S>              <C>                                                                                        <C>
                                                        ARTICLE XI
                                                LIMITATION OF LIABILITY OF
                                     HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS

         SECTION 11.1     Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
                          ---------                                                                                      
         SECTION 11.2     Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
                          -----------                                                                                    
         SECTION 11.3     Fiduciary Duty  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
                          --------------                                                                                 
         SECTION 11.4     Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
                          ---------------                                                                                
         SECTION 11.5     Outside Businesses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
                          ------------------                                                                             

                                                       ARTICLE XII
                                                        ACCOUNTING

         SECTION 12.1     Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
                          -----------                                                                                    
         SECTION 12.2     Certain Accounting Matters  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
                          --------------------------                                                                     
         SECTION 12.3     Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
                          -------                                                                                        
         SECTION 12.4     Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
                          -----------                                                                                    

                                                       ARTICLE XIII
                                                 AMENDMENTS AND MEETINGS

         SECTION 13.1     Amendments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
                          ----------                                                                                     
         SECTION 13.2     Meetings of the Holders of Trust Securities; Action by Written Consent  . . . . . . . . . .  44
                          ----------------------------------------------------------------------                         

                                                       ARTICLE XIV
                                 REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE

         SECTION 14.1     Representations and Warranties of Property Trustee  . . . . . . . . . . . . . . . . . . . .  45
                          --------------------------------------------------                                             
         SECTION 14.2     Representations and Warranties of Delaware Trustee  . . . . . . . . . . . . . . . . . . . .  45
                          --------------------------------------------------                                             

                                                       ARTICLE XV
                                                     MISCELLANEOUS

         SECTION 15.1     Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
                          -------                                                                                        
         SECTION 15.2     Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
                          -------------                                                                                  
         SECTION 15.3     Intention of the Parties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
                          ------------------------                                                                       
         SECTION 15.4     Headings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
                          --------                                                                                       
         SECTION 15.5     Successors and Assigns  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
                          ----------------------                                                                         
         SECTION 15.6     Partial Enforceability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
                          ----------------------                                                                         
         SECTION 15.7     Counterparts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
                          ------------                                                                                   

         EXHIBIT A-1              FORM OF PREFERRED SECURITY CERTIFICATE  . . . . . . . . . . . . . . . . . . . . .  A1-1
         EXHIBIT A-2              FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . .  A2-1
</TABLE>





                                      iii
<PAGE>   5
                             CROSS-REFERENCE TABLE*


<TABLE>
<CAPTION>
                               Section of
                           Trust Indenture Act                               Section of
                           of 1939, as amended                              Declaration
----------------------------------------------------------------------    ---------------
 <S>                                                                      <C>
 310(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6.3(a)
 310(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    Inapplicable
 311(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    Inapplicable
 312(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2.2(a)
 312(b)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2.2(b)
 313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2.3, 12.2(b)
 314(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2.4
 314(b)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    Inapplicable
 314(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2.5
 314(d)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    Inapplicable
 314(f)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    Inapplicable
 315(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3.9(b)
 315(b)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2.7
 315(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3.9(a)
 315(d)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3.9(a)
 316(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2.6, 8.4, 8.5
 316(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3.6(e)
</TABLE>

_______________

*        This Cross-Reference Table does not constitute part of the Declaration
         and shall not affect the interpretation of any of its terms or
         provisions.





                                       iv
<PAGE>   6
                              AMENDED AND RESTATED
                              DECLARATION OF TRUST
                                       OF
                             ENRON CAPITAL TRUST II

                                January 13, 1997


         AMENDED AND RESTATED DECLARATION OF TRUST (the "Declaration") dated
and effective as of January 13, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the Holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;

         WHEREAS, certain of the Trustees and the Sponsor established ENRON
CAPITAL TRUST II (the "Trust"), a trust under the Delaware Business Trust Act
(the "Trust Act") pursuant to a Declaration of Trust dated as of December 23,
1996, (the "Original Declaration") and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on December 23, 1996, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in the Partnership Preferred Securities;

         WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and

         WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
wish to amend and restate each and every term and provision of the Original
Declaration.

         NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the Holders, from time to time, of the securities
representing undivided beneficial ownership interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.

                                   ARTICLE I
                         INTERPRETATION AND DEFINITIONS

SECTION 1.1      Definitions.

         Unless the context otherwise requires:

         (a)     capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;

         (b)     a term defined anywhere in this Declaration has the same
meaning throughout;

         (c)     all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;

         (d)     all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;

         (e)     a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires;

         (f)     a reference to the singular includes the plural and vice 
versa; and

         (g)     a term used in this Agreement and not otherwise defined herein
shall have the meaning ascribed to such term in the Limited Partnership
Agreement.
<PAGE>   7
         "Affiliate" means, with respect to any specified person, any other
person that directly or indirectly controls or is controlled by, or is under
common control with such specified person.

         "Affiliate Investment Instruments" has the meaning set forth in
Section 7.1 of the Limited Partnership Agreement.

         "Authorized Officer" of a Person means any Person that is authorized
to bind such Person.

         "Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as set forth in Section 10.4 of this
Declaration.

         "Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to
close.

         "Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.

         "Certificate" means a Trust Common Security Certificate or a Trust
Preferred Security Certificate.

         "Change in 1940 Act Law" means any change on or after the date hereof
in law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority with the result that the Trust is or will be considered an
"investment company" which is required to be registered under the 1940 Act.

         "Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Trust Preferred Securities and in whose name or in the name
of a nominee of that organization shall be registered a Global Certificate and
which shall undertake to effect book- entry transfers and pledges of beneficial
interests in the Trust Preferred Securities.

         "Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book-entry transfers and pledges of interest in securities
deposited with the Clearing Agency.

         "Closing Date" means January 16, 1997.

         "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.

         "Commission" means the Securities and Exchange Commission.

         "Common Security Holder of the Trust" means the Company in its
capacity as Holder of the Trust Common Security.

         "Company" means Enron Corp., a Delaware corporation.

         "Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, director, shareholder, member, partner, employee,
representative or agent of the Trust or its Affiliates.

         "Compounded Distributions" has the meaning set forth in Section 7.1(a)
of this Declaration.





                                       2
<PAGE>   8
         "Corporate Trust Office" means the principal corporate trust office of
the Property Trustee at which, at any particular time, its corporate trust
business shall be administered, which office at the date hereof is located at
450 West 33rd Street, 15th Floor, New York, NY 10001.

         "Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Trust Securities.

         "Definitive Trust Preferred Security Certificates" has the meaning set
forth in Section 10.4 of this Declaration.

         "Delaware Trustee" has the meaning set forth in Section 6.2 of this
Declaration.

         "Distribution" has the meaning set forth in Section 7.1(a) of this
Declaration.

         "DTC" means the Depository Trust Company, the initial Clearing Agency.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.

         "Fiduciary Indemnified Person" has the meaning set forth in Section
11.4(b) of this Declaration.

         "Fiscal Period" has the meaning set forth in Section 1.1 of the
Limited Partnership Agreement.

         "Fiscal Year" has the meaning set forth in Section 12.1 of this
Declaration.

         "General Partner" means the Company in its capacity as the general
partner of the Partnership, its permitted successors, or any successor general
partner in the Partnership admitted as such pursuant to the Limited Partnership
Agreement.

         "Global Certificate" has the meaning set forth in Section 10.4 of this
Declaration.

         "Holder" means a Person in whose name a Certificate representing a
Trust Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.

         "Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.

         "Initial Debentures" has the meaning set forth in Section 7.1(b) of
the Limited Partnership Agreement.

         "Investment Affiliate" means the Company or any corporation,
partnership, limited liability company or other entity (other than the
Partnership or the Trust) that is controlled by the Company and is not an
investment company by reason of Section 3(a) or 3(b) of the 1940 Act.

         "Investment Company" means an investment company as defined in the
1940 Act.

         "Investment Guarantee" means any guarantee by the Company with respect
to (1) payment of interest, principal and other payment terms of Affiliate
Investment Instruments that are debt securities of an Investment Affiliate and
(2) the payment of dividends, distributions and other payment terms of
Affiliate Investment Instruments that are preferred or preference stock of an
Investment Affiliate when, as and if declared by such Investment Affiliate.

         "Legal Action" has the meaning set forth in Section 3.6(h) of this
Declaration.





                                       3
<PAGE>   9
         "Limited Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Enron Preferred Funding II, L.P. to be
dated as of January 16, 1997.

         "List of Holders" has the meaning set forth in Section 2.2(a) of this
Declaration.

         "Majority in liquidation amount of the Trust Securities" means, except
as provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Trust Securities or all outstanding Trust Securities of the relevant class, as
the case may be.

         "Ministerial Action" means, a ministerial action (such as filing a
form or making an election or pursuing some other similar reasonable measure)
which in the sole judgment of the Company has or will cause no adverse effect
on the Trust, the Partnership, the Company, or the holders of the Trust
Securities and will involve no material cost.

         "Nasdaq" means the National Association of Securities Dealers
Automated Quotation System.

         "1940 Act"  means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.

         "Officers' Certificate" means, with respect to any Person (who is not
an individual), a certificate signed by two authorized officers of such Person,
and, with respect to a natural person, a certificate signed by such person.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Declaration shall include:

         (a)     a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;

         (b)     a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;

         (c)     a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

         (d)     a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.

         "Partnership" means Enron Preferred Funding II, L.P., a Delaware
limited partnership formed pursuant to the Limited Partnership Agreement.

         "Partnership Enforcement Event" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.

         "Partnership Guarantee" means the Partnership Guarantee Agreement to
be dated as of January 16, 1997, by the Company in favor of the Partnership
Preferred Security Holders with respect to the Partnership Preferred
Securities, as amended or supplemented from time to time.

         "Partnership Preferred Securities" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.





                                       4
<PAGE>   10
         "Partnership Special Event" has the meaning set forth in Section 1.1
of the Limited Partnership Agreement.

         "Payment Amount" has the meaning set forth in Section 7.1(a) of this
Declaration.

         "Paying Agent" has the meaning set forth in Section 3.8(g) of this
Declaration.

         "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.

         "Preferred Security Beneficial Owner" means, with respect to a
Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, or each case in
accordance with the rules of such Clearing Agency).

         "Property Account" has the meaning set forth in Section 3.8(c) of this
Declaration.

         "Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3 of this Declaration.

         "Pro Rata" means, in reference to any distributions on or redemptions
of Trust Securities or the distribution of Partnership Preferred Securities or
any other payment with respect to Trust Securities in connection with a Trust
Special Event or liquidation of the Trust, pro rata to each Holder of Trust
Securities according to the aggregate liquidation amount of the Trust
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Trust Securities outstanding.

         "Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.

         "Redemption Price" has the meaning set forth in Section 8.2(a) of this
Declaration.

         "Regular Trustee" has the meaning set forth in Section 6.1 of this
Declaration.

         "Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.

         "Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, including
any vice-president, any assistant vice-president, any secretary, any assistant
secretary, the treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Property Trustee customarily performing functions
similar to those performed by any of the above designated officers, who has
direct responsibility for the administration of the Trust, and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.

         "Rule 3a-5" means Rule 3a-5 under the 1940 Act.

         "Securities Act" means the Securities Act of 1933, as amended from
time to time or any successor legislation.





                                       5
<PAGE>   11
         "Special Representative" has the meaning set forth in Section
6.2(h)(i) of the Limited Partnership Agreement.

         "Sponsor" means the Company or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.

         "Successor Delaware Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.

         "Successor Entity" has the meaning set forth in Section 3.15 of this
Declaration.

         "Successor Property Trustee" has the meaning set forth in Section
6.7(b) of this Declaration.

         "Successor Trust Securities" has the meaning set forth in Section 3.15
of this Declaration.

         "Super Majority" has the meaning set forth in Section 2.6(a)(ii) of
this Declaration.

         "Tax Action" means (a) an amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (b)
a judicial decision interpreting, applying or clarifying such laws or
regulations, (c) an administrative pronouncement or action that represents an
official position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or (d) a threatened challenge asserted in
connection with an audit of the Company or any of its subsidiaries, the
Partnership, or the Trust, or a threatened challenge asserted in writing
against any other taxpayer that has raised capital through the issuance of
securities that are substantially similar to the Initial Debentures, the
Partnership Preferred Securities, or the Trust Preferred Securities, which
amendment or change is adopted or which decision, pronouncement or proposed
change is announced or which action, clarification or challenge occurs on or
after the date of the prospectus related to the issuance of the Trust Preferred
Securities.

         "10% in liquidation amount of the Trust Securities" means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Trust
Preferred Securities or Holders of outstanding Trust Common Securities voting
separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Trust Securities or all outstanding Trust Securities of the relevant class, as
the case may be.

         "Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).

         "Trust Common Security" has the meaning set forth in Section 8.1 of
this Declaration.

         "Trust Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.

         "Trust Common Securities Guarantee" means the Trust Common Securities
Guarantee Agreement to be dated as of January 16, 1997, entered into by the
Company, as Guarantor, for the benefit of the holders of the Trust Common
Securities.

         "Trust Dissolution Tax Opinion" means an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that there has been a Trust Tax Event.





                                       6
<PAGE>   12
         "Trust Enforcement Event" means the occurrence, at any time, of (i)
arrearages on distributions on the Trust Preferred Securities that shall exist
for six consecutive quarterly distribution periods, (ii) a default by the
Company in respect of any of its obligations under the Trust Preferred
Securities Guarantee or (iii) a Partnership Enforcement Event (as defined in
the Limited Partnership Agreement).

         "Trust Guarantees" means the Trust Common Securities Guarantee and the
Trust Preferred Securities Guarantee, collectively.

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.

         "Trust Investment Company Event" means that the Company shall have
requested and received and shall have delivered to the Regular Trustees an
opinion of nationally recognized independent legal counsel experienced in such
matters to the effect that as a result of a Change in 1940 Act Law, the Trust
is or will be considered an "investment company" which is required to be
registered under the 1940 Act.

         "Trust Liquidation" has the meaning set forth in Section 9.2(a) of
this Declaration.

         "Trust Preferred Securities Guarantee" has the meaning set forth in
Section 1.1 of the Limited Partnership Agreement.

         "Trust Liquidation Distribution" has the meaning set forth in Section
9.2(a) of this Declaration.

         "Trust Preferred Security" has the meaning set forth in Section 8.1(a)
of this Declaration.

         "Trust Preferred Security Beneficial Owner" means, with respect to a
Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).

         "Trust Preferred Security Certificate" means a certificate
representing a Trust Preferred Security substantially in the form of Exhibit
A-1.

         "Trust Redemption Tax Opinion" means an opinion of nationally
recognized independent tax counsel (which may be counsel for the Company)
experienced in such matters that there has been a Trust Tax Event, and
following such Trust Tax Event there is more than an insubstantial risk that
interest payable by one or more of the Investment Affiliates with respect to
the Initial Debentures is not, or will not be, deductible by such Investment
Affiliate for United States federal income tax purposes even if the Partnership
Preferred Securities were distributed to the Holders of the Trust Securities in
liquidation of such Holders' interests in the Trust.

         "Trust Securities" means the Trust Common Securities and the Trust
Preferred Securities.

         "Trust Special Event" means a Trust Tax Event or a Trust Investment
Company Event.

         "Trust Tax Event" means that the Company shall have requested and
received and shall have delivered to the Regular Trustees, an opinion of
nationally recognized tax counsel experienced in such matters (who may be
counsel for the Company) to the effect that there has been a Tax Action that
results in there being more than an insubstantial risk that (i) the Trust is,
or will be subject to United States federal income tax with respect to income
accrued or received on the Partnership Preferred Securities, (ii) the Trust is,
or will be subject to more than a de minimis amount of other taxes, duties or
other governmental charges or (iii) interest payable by one or more of the
Investment Affiliates with respect to the Initial Debentures is not, or will
not be, deductible by such Investment Affiliate for United States federal
income tax purposes.





                                       7
<PAGE>   13
         "Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.


                                   ARTICLE II
                              TRUST INDENTURE ACT

SECTION 2.1      Trust Indenture Act; Application.

         (a)     This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to
the extent applicable, be governed by such provisions.

         (b)     The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.

         (c)     If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

         (d)     The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.

SECTION 2.2      Lists of Holders of Trust Securities.

         (a)     Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the Trust
Securities ("List of Holders") as of such record date, provided that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee.  The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of
Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity) provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.

         (b)     The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.

SECTION 2.3      Reports by the Property Trustee.

         Within 60 days after May 15 of each year, the Property Trustee shall
provide to the Holders of the Trust Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act.  The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.

SECTION 2.4      Periodic Reports to Property Trustee.

         Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information
as required by Section 314 of the Trust Indenture Act (if any) and the





                                       8
<PAGE>   14
compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.

SECTION 2.5      Evidence of Compliance with Conditions Precedent.

         Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act.  Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.

SECTION 2.6      Trust Enforcement Events; Waiver.

         (a)     The Holders of a Majority in liquidation amount of Trust
Preferred Securities may, by vote, on behalf of the Holders of all of the Trust
Preferred Securities, waive any past Trust Enforcement Event in respect of the
Trust Preferred Securities and its consequences, provided that, if the
underlying event of default or Partnership Enforcement Event:

                 (i)      is not waivable under the Trust Preferred Securities
         Guarantee or the Limited Partnership Agreement, the Trust Enforcement
         Event under this Declaration shall also not be waivable; or

                 (ii)     requires the consent or vote of the Holders of
         greater than a Majority in liquidation amount of the Trust Preferred
         Securities to be waived under the Trust Preferred Securities Guarantee
         or the Partnership Preferred Securities to be waived under the Limited
         Partnership Agreement (a "Super Majority"), the Trust Enforcement
         Event under this Declaration may only be waived by the vote of the
         Holders of at least the relevant Super Majority in liquidation amount
         of the Trust Preferred Securities.

The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Trust Securities, as permitted by the Trust Indenture Act.  Upon such waiver,
any such default shall cease to exist, and any Trust Enforcement Event with
respect to the Trust Preferred Securities arising therefrom shall be deemed to
have been cured, for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Trust Enforcement Event with
respect to the Trust Preferred Securities or impair any right consequent
thereon.  Any waiver by the Holders of the Trust Preferred Securities of Trust
Enforcement Events with respect to the Trust Preferred Securities shall also be
deemed to constitute a waiver by the Holders of the Trust Common Securities of
any such Trust Enforcement Event with respect to the Trust Common Securities
for all purposes of this Declaration without any further act, vote, or consent
of the Holders of the Trust Common Securities.

         (b)     The Holders of a Majority in liquidation amount of the Trust
Common Securities may, by vote, on behalf of the Holders of all of the Trust
Common Securities, waive any past Trust Enforcement Event with respect to the
Trust Common Securities and its consequences, provided that, if the underlying
event of default or Partnership Enforcement Event:

                 (i)      is not waivable under the Trust Common Securities
         Guarantee or the Limited Partnership Agreement, except where the
         Holders of the Trust Common Securities are deemed to have waived such
         Trust Enforcement Event under this Declaration as provided below in
         this Section 2.6(b), the Trust Enforcement Event under this
         Declaration shall also not be waivable; or

                 (ii)     requires the consent or vote of the Holders of a
         Super Majority to be waived, except where the Holders of the Trust
         Common Securities are deemed to have waived such Trust Enforcement
         Event under the Declaration as provided below in this Section 2.6(b),
         the Trust Enforcement Event under this Declaration may only be waived
         by the vote of the Holders of at least the relevant Super Majority in
         liquidation amount of the Trust Common Securities;





                                       9
<PAGE>   15
provided further, each Holder of Trust Common Securities will be deemed to have
waived any such Trust Enforcement Event and all Trust Enforcement Events with
respect to the Trust Common Securities and its consequences until all Trust
Enforcement Events with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated, and until such Trust Enforcement Events
have been so cured, waived or otherwise eliminated, the Property Trustee will
be deemed to be acting solely on behalf of the Holders of the Trust Preferred
Securities and only the Holders of the Trust Preferred Securities will have the
right to direct the Property Trustee in accordance with the terms of the Trust
Securities.  The foregoing provisions of this Section 2.6(b) shall be in lieu
of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Trust Securities, as permitted
by the Trust Indenture Act.  Subject to the foregoing provisions of this
Section 2.6(b), upon such waiver, any such default shall cease to exist and any
Trust Enforcement Event with respect to the Trust Common Securities arising
therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Trust Enforcement Event with respect to the Trust Common Securities or
impair any right consequent thereon.

         (c)     A waiver of Partnership Enforcement Events under the Limited
Partnership Agreement by the Property Trustee at the direction of the Holders
of the Trust Preferred Securities constitutes a waiver of the corresponding
Trust Enforcement Event under this Declaration.  The foregoing provisions of
this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust
Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is
hereby expressly excluded from this Declaration and the Trust Securities, as
permitted by the Trust Indenture Act.

SECTION 2.7      Trust Enforcement Event; Notice.

         The Property Trustee shall, within 90 days after the occurrence of a
Trust Enforcement Event, transmit by mail, first class postage prepaid, to the
Holders of the Trust Securities, notices of all defaults with respect to the
Trust Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7 being hereby defined
to be defaults as defined in the Trust Guarantees or the Limited Partnership
Agreement, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Affiliate Investment Instruments or in the payment of
any sinking fund installment established for the Affiliate Investment
Instruments, the Property Trustee shall be protected in withholding such notice
if and so long as a Responsible Officer of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Trust Securities.


                                  ARTICLE III
                                  ORGANIZATION

SECTION 3.1      Name.

         The Trust is named "Enron Capital Trust II," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Trust Securities.  The Trust's activities may be conducted under
the name of the Trust or any other name deemed advisable by the Regular
Trustees.

SECTION 3.2      Office.

         The address of the principal office of the Trust is c/o Enron Corp.,
1400 Smith Street, Houston, Texas 77002.  On ten Business Days written notice
to the Holders of Trust Securities, the Regular Trustees may designate another
principal office.





                                       10
<PAGE>   16
SECTION 3.3      Purpose.

         The exclusive purposes and functions of the Trust are (a) to issue and
sell Trust Securities and to use the proceeds from such sale to acquire the
Partnership Preferred Securities, and (b) except as otherwise limited herein,
to engage in only those other activities necessary, or incidental thereto.  The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust to be classified as an
association or a publicly traded partnership taxable as a corporation for
United States federal income tax purposes.

SECTION 3.4      Authority.

         Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust.  An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust.  In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust.  Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.

SECTION 3.5      Title to Property of the Trust.

         Except as provided in Section 3.8 with respect to the Partnership
Preferred Securities and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust.  The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial ownership interest in the assets
of the Trust.

SECTION 3.6      Powers and Duties of the Regular Trustees.

         The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:

         (a)     To issue and sell the Trust Preferred Securities and the Trust
Common Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Trust Preferred Securities and
no more than one series of Trust Common Securities, and, provided further, that
there shall be no interests in the Trust other than the Trust Securities, and
the issuance of Trust Securities shall be limited to a one-time, simultaneous
issuance of both Trust Preferred Securities and Trust Common Securities on the
Closing Date;

         (b)     In connection with the issue and sale of the Trust Preferred
Securities, at the direction of the Sponsor, to:

                 (i)      execute and file with the Commission the registration
         statement on Forms S-1 or  S-3 prepared by the Sponsor, including any
         amendments thereto, pertaining to the Trust Preferred Securities;

                 (ii)     execute and file any documents prepared by the
         Sponsor, or take any acts as determined by the Sponsor to be necessary
         in order to qualify or register all or part of the Trust Preferred
         Securities in any State in which the Sponsor has determined to qualify
         or register such Trust Preferred Securities for sale;

                 (iii)    execute and file an application, prepared by the
         Sponsor, to the New York Stock Exchange, Inc.  or any other national
         stock exchange or the Nasdaq Stock Market's National Market for
         listing upon notice of issuance of any Trust Preferred Securities;





                                       11
<PAGE>   17
                 (iv)     execute and file with the Commission a registration
         statement on Form 8-A, including any amendments thereto, prepared by
         the Sponsor, relating to the registration of the Trust Preferred
         Securities under Section 12(b) of the Exchange Act; and

                 (v)      execute and enter into an underwriting agreement
         providing for the sale of the Trust Preferred Securities and perform
         the duties and obligations of the Trust thereunder;

         (c)     To acquire the Partnership Preferred Securities with the
proceeds of the sale of the Trust Preferred Securities and the Trust Common
Securities; provided, however, that the Regular Trustees shall cause legal
title to the Partnership Preferred Securities to be held of record in the name
of the Property Trustee for the benefit of the Holders of the Trust Preferred
Securities and the Holders of Trust Common Securities;

         (d)     To give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Trust Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before taking
or refraining from taking any Ministerial Action in relation to a Trust Special
Event;

         (e)     To establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Trust Preferred Securities and Holders of Trust
Common Securities as to such actions and applicable record dates;

         (f)     To give prompt written notice to the Holders of the Trust
Securities of any notice received from the Partnership of the General Partner's
election not to make a current, quarterly distribution on the Partnership
Preferred Securities under the Limited Partnership Agreement;

         (g)     To take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Trust Securities;

         (h)     To bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(f), the Property Trustee
has the exclusive power to bring such Legal Action;

         (i)     To employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;

         (j)     To cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;

         (k)     To give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Regular Trustee;

         (l)     To incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;

         (m)     To act as, or appoint another Person to act as, registrar and
transfer agent for the Trust Securities;

         (n)     To execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;

         (o)     To take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Trust
Preferred Securities or to enable the Trust to effect the purposes for which
the Trust was created;





                                       12
<PAGE>   18
         (p)     To take any action, or to take no action, not inconsistent
with this Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including, but not
limited to:

                 (i)      causing the Trust not to be deemed to be an
         Investment Company required to be registered under the 1940 Act; and

                 (ii)     taking no action which would be reasonably likely to
         cause the Trust to be classified as an association or a publicly
         traded partnership taxable as a corporation for United States federal
         income tax purposes;

provided that such action does not adversely affect the interests of Holders;
and

         (q)     To take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust.

         The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.

         Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.

         Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Partnership pursuant to Section 9.1 of the
Limited Partnership Agreement.

SECTION 3.7      Prohibition of Actions by the Trust and the Trustees.

         The Trust shall not, and the Trustees (including the Property Trustee)
shall cause the Trust not to, engage in any activity other than as required or
authorized by this Declaration.  In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall cause the Trust not to:

         (a)     invest any proceeds received by the Trust from holding the
Partnership Preferred Securities, but shall distribute all such proceeds to
Holders of Trust Securities pursuant to the terms of this Declaration and of
the Trust Securities;

         (b)     acquire any assets other than as expressly provided herein;

         (c)     possess Trust property for other than a Trust purpose;

         (d)     make any loans or incur any indebtedness or acquire any
securities other than the Partnership Preferred Securities;

         (e)     possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Trust Securities in any way whatsoever;

         (f)     issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Trust
Securities;

         (g)     other than as set forth herein, (A) cause the Special
Representative to direct the time, method and place of conducting any
proceeding for any remedy available to the Special Representative or exercising
any trust or power conferred upon the Special Representative with respect to
the Partnership Preferred Securities, the





                                       13
<PAGE>   19
Affiliate Investment Instruments, and the Investment Guarantees, (B) cause the
Special Representative to waive any past default that is waivable under the
Limited Partnership Agreement, the Affiliate Investment Instruments or the
Investment Guarantees, (C) cause the Special Representative to exercise any
right to rescind or annul any declaration that the principal of, or other
amounts in respect of, any Affiliate Investment Instruments is due and payable
or (D) consent to any amendment, modification or termination of the Limited
Partnership Agreement or the Partnership Preferred Securities where such
consent shall be required; and

         (h)     other than in connection with the liquidation of the Trust
pursuant to a Trust Special Event or upon redemption of all the Trust
Securities, file a certificate of cancellation of the Trust.

SECTION 3.8      Powers and Duties of the Property Trustee.

         (a)     The legal title to the Partnership Preferred Securities shall
be owned by and held of record in the name of the Property Trustee in trust for
the benefit of the Holders of the Trust Securities.  The right, title and
interest of the Property Trustee to the Partnership Preferred Securities shall
vest automatically in each Person who may hereafter be appointed as Property
Trustee in accordance with Section 6.7.  Such vesting and cessation of title
shall be effective whether or not conveyancing documents with regard to the
Partnership Preferred Securities have been executed and delivered.

         (b)     The Property Trustee shall not transfer its right, title and
interest in the Partnership Preferred Securities to the Regular Trustees or to
the Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).

         (c)     The Property Trustee shall:

                 (i)      establish and maintain a segregated non-interest
         bearing trust account (the "Property Account") in the name of and
         under the exclusive control of the Property Trustee on behalf of the
         Holders of the Trust Securities and, upon the receipt of payments of
         funds made in respect of the Partnership Preferred Securities held by
         the Property Trustee, deposit such funds into the Property Account and
         make payments to the Holders of the Trust Preferred Securities and
         Holders of the Trust Common Securities from the Property Account in
         accordance with Section 7.1.  Funds in the Property Account shall be
         held uninvested until disbursed in accordance with this Declaration.
         The Property Account shall be an account that is maintained with a
         banking institution authorized to exercise corporate trust powers and
         having a combined capital and surplus of at least $50,000,000 and
         subject to supervision or examination by federal or state authority;

                 (ii)     engage in such ministerial activities as shall be
         necessary or appropriate to effect the redemption of the Trust
         Preferred Securities and the Trust Common Securities to the extent the
         Partnership Preferred Securities are redeemed; and

                 (iii)    upon written notice of distribution issued by the
         Regular Trustees in accordance with the terms of the Trust Securities,
         engage in such ministerial activities as shall be necessary or
         appropriate to effect the distribution of the Partnership Preferred
         Securities to Holders of Trust Securities upon the occurrence of a
         Trust Special Event.

         (d)     The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Trust Securities.

         (e)     The Property Trustee shall take any Legal Action which arises
out of or in connection with (i) a Trust Enforcement Event of which a
Responsible Officer of the Property Trustee has actual knowledge or (ii)  the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act.





                                       14
<PAGE>   20
         (f)     The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a Holder of Partnership Preferred
Securities and, if a Trust Enforcement Event occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Trust Securities,
enforce its rights as Holder of the Partnership Preferred Securities subject to
the rights of the Holders pursuant to the terms of such Trust Securities.

         (g)     The Property Trustee may authorize one or more Persons (each,
a "Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Trust Securities and any
such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.

         (h)     The Property Trustee shall continue to serve as a Trustee
until either:

                 (i)      the Trust has been completely liquidated and the
         proceeds of the liquidation distributed to the Holders of Trust
         Securities pursuant to the terms of the Trust Securities; or

                 (ii)     a Successor Property Trustee has been appointed and
         has accepted that appointment in accordance with Section 6.7.

         (i)     Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.

         The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.

SECTION 3.9      Certain Duties and Responsibilities of the Property Trustee.

         (a)     The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing or waiver of all Trust Enforcement
Events that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Declaration and no implied covenants shall
be read into this Declaration against the Property Trustee.  In case a Trust
Enforcement Event has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.

         (b)     No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

                 (i)      prior to the occurrence of a Trust Enforcement Event
         and after the curing or waiving of all such Trust Enforcement Events
         that may have occurred:

                          (A)     the duties and obligations of the Property
                 Trustee shall be determined solely by the express provisions
                 of this Declaration and the Property Trustee shall not be
                 liable except for the performance of such duties and
                 obligations as are specifically set forth in this Declaration,
                 and no implied covenants or obligations shall be read into
                 this Declaration against the Property Trustee; and

                          (B)     in the absence of bad faith on the part of
                 the Property Trustee, the Property Trustee may conclusively
                 rely, as to the truth of the statements and the correctness of
                 the opinions expressed therein, upon any certificates or
                 opinions furnished to the Property Trustee and conforming to
                 the requirements of this Declaration; but in the case of any
                 such certificates





                                       15
<PAGE>   21
                 or opinions that by any provision hereof are specifically
                 required to be furnished to the Property Trustee, the Property
                 Trustee shall be under a duty to examine the same to determine
                 whether or not they conform to the requirements of this
                 Declaration;

                 (ii)     the Property Trustee shall not be liable for any
         error of judgment made in good faith by a Responsible Officer of the
         Property Trustee, unless it shall be proved that the Property Trustee
         was negligent in ascertaining the pertinent facts;

                 (iii)    subject to the requirement of the Property Trustee
         receiving a tax opinion as set forth in Section 8.4(d) or 8.5(c), as
         the case may be, the Property Trustee shall not be liable with respect
         to any action taken or omitted to be taken by it in good faith in
         accordance with the direction of the Holders of not less than a
         Majority in liquidation amount of the Trust Securities relating to the
         time, method and place of conducting any proceeding for any remedy
         available to the Property Trustee, or exercising any trust or power
         conferred upon the Property Trustee under this Declaration;

                 (iv)     no provision of this Declaration shall require the
         Property Trustee to expend or risk its own funds or otherwise incur
         personal financial liability in the performance of any of its duties
         or in the exercise of any of its rights or powers, if it shall have
         reasonable grounds for believing that the repayment of such funds or
         liability is not reasonably assured to it under the terms of this
         Declaration or indemnity reasonably satisfactory to the Property
         Trustee against such risk or liability is not reasonably assured to
         it;

                 (v)      the Property Trustee's sole duty with respect to the
         custody, safe keeping and physical preservation of the Partnership
         Preferred Securities and the Property Account shall be to deal with
         such property in a similar manner as the Property Trustee deals with
         similar property for its own account, subject to the protections and
         limitations on liability afforded to the Property Trustee under this
         Declaration and the Trust Indenture Act;

                 (vi)     the Property Trustee shall have no duty or liability
         for or with respect to the value, genuineness, existence or
         sufficiency of the Partnership Preferred Securities or the payment of
         any taxes or assessments levied thereon or in connection therewith;

                 (vii)    money held by the Property Trustee need not be
         segregated from other funds held by it except in relation to the
         Property Account maintained by the Property Trustee pursuant to
         Section 3.8(c)(i) and except to the extent otherwise required by law;
         and

                 (viii)           the Property Trustee shall not be responsible
         for monitoring the compliance by the Regular Trustees or the Sponsor
         with their respective duties under this Declaration, nor shall the
         Property Trustee be liable for any default or misconduct of the
         Regular Trustees or the Sponsor.

SECTION 3.10     Certain Rights of Property Trustee.

         (a)     Subject to the provisions of Section 3.9:

                 (i)      the Property Trustee may conclusively rely and shall
         be fully protected in acting or refraining from acting upon any
         resolution, certificate, statement, instrument, opinion, report,
         notice, request, direction, consent, order, bond, debenture, note,
         other evidence of indebtedness or other paper or document believed by
         it to be genuine and to have been signed, sent or presented by the
         proper party or parties;

                 (ii)     any direction or act of the Sponsor or the Regular
         Trustees acting on behalf of the Trust contemplated by this
         Declaration shall be sufficiently evidenced by an Officers'
         Certificate;





                                       16
<PAGE>   22
                 (iii)    whenever in the administration of this Declaration,
         the Property Trustee shall deem it desirable that a matter be proved
         or established before taking, suffering or omitting any action
         hereunder, the Property Trustee (unless other evidence is herein
         specifically prescribed) may, in the absence of bad faith on its part,
         request and conclusively rely upon an Officers' Certificate which,
         upon receipt of such request, shall be promptly delivered by the
         Sponsor or the Regular Trustees;

                 (iv)     the Property Trustee shall have no duty to see to any
         recording, filing or registration of any instrument (including any
         financing or continuation statement or any filing under tax or
         securities laws) or any rerecording, refiling or registration thereof;

                 (v)      the Property Trustee may, at the expense of the
         Sponsor, consult with counsel or other experts and the advice or
         opinion of such counsel and experts with respect to legal matters or
         advice within the scope of such experts' area of expertise shall be
         full and complete authorization and protection in respect of any
         action taken, suffered or omitted by it hereunder in good faith and in
         accordance with such advice or opinion; such counsel may be counsel to
         the Sponsor or any of its Affiliates, and may include any of its
         employees.  The Property Trustee shall have the right at any time to
         seek instructions concerning the administration of this Declaration
         from any court of competent jurisdiction;

                 (vi)     the Property Trustee shall be under no obligation to
         exercise any of the rights or powers vested in it by this Declaration
         at the request or direction of any Holder, unless (a) such Holder
         shall have provided to the Property Trustee security and indemnity,
         reasonably satisfactory to the Property Trustee, against the fees,
         charges, costs, expenses (including attorneys' fees and expenses and
         the expenses of the Property Trustee's agents, nominees or custodians)
         and liabilities that might be incurred by it in complying with such
         request or direction, including such reasonable advances as may be
         requested by the Property Trustee and (b) the Property Trustee has
         obtained the legal opinions, if any, required by Section 8.4(d) or
         8.5(c), as the case may be, of this Agreement; provided, that, nothing
         contained in this Section 3.10(a)(vi) shall be taken to relieve the
         Property Trustee, upon the occurrence of a Trust Enforcement Event, of
         its obligation to exercise the rights and powers vested in it by this
         Declaration;

                 (vii)    the Property Trustee shall not be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         direction, consent, order, bond, debenture, note, other evidence of
         indebtedness or other paper or document, but the Property Trustee, in
         its discretion, may make such further inquiry or investigation into
         such facts or matters as it may see fit;

                 (viii)   the Property Trustee may execute any of the trusts or
         powers hereunder or perform any duties hereunder either directly or by
         or through agents, custodians, nominees or attorneys and the Property
         Trustee shall not be responsible for any misconduct or negligence on
         the part of any agent or attorney appointed with due care by it
         hereunder;

                 (ix)     any action taken by the Property Trustee or its
         agents hereunder shall bind the Trust and the Holders of the Trust
         Securities, and the signature of the Property Trustee or its agents
         alone shall be sufficient and effective to perform any such action and
         no third party shall be required to inquire as to the authority of the
         Property Trustee to so act or as to its compliance with any of the
         terms and provisions of this Declaration, both of which shall be
         conclusively evidenced by the Property Trustee's or its agent's taking
         such action;

                 (x)      whenever in the administration of this Declaration
         the Property Trustee shall deem it desirable to receive instructions
         with respect to enforcing any remedy or right or taking any other
         action hereunder, the Property Trustee (i) may request instructions
         from the Holders of the Trust Securities which instructions may only
         be given by the Holders of the same proportion in liquidation amount
         of the Trust Securities as would be entitled to direct the Property
         Trustee under the terms of the Trust Securities in respect of such
         remedy, right or action, (ii) may refrain from enforcing such remedy
         or right or taking such





                                       17
<PAGE>   23
         other action until such instructions are received, and (iii) shall be
         protected in conclusively relying on or acting in accordance with such
         instructions; provided, however, that the Property Trustee shall not
         be required to take any action unless it shall have obtained such
         legal opinions, if any, required by Sections 8.4(d) or 8.5(c), as the
         case may be, of this Agreement; and

                 (xi)     except as otherwise expressly provided by this
         Declaration, the Property Trustee shall not be under any obligation to
         take any action that is discretionary under the provisions of this
         Declaration.

                 In the event that the Trustee is also acting as authenticating
         agent, Paying Agent, transfer agent and security registrar, the rights
         and protections afforded to the Trustee pursuant to this Article III
         shall also be afforded to such authenticating agent, Paying Agent,
         transfer agent and security registrar.

                 (b)      No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation.  No permissive power or authority available to the Property Trustee
shall be construed to be a duty.

SECTION 3.11     Delaware Trustee.

         Notwithstanding any provision of this Declaration other than Section
6.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees or the Property Trustee described in this Declaration.  Except
as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act. In no event shall the Property Trustee or the Delaware
Trustee be liable for any act or omission of any of the Regular Trustees
hereunder.

SECTION 3.12     Execution of Documents.

         Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute on behalf of the Trust any documents that the Regular Trustees have
the power and authority to cause the Trust to execute pursuant to Section 3.6.

SECTION 3.13     Not Responsible for Recitals or Issuance of Trust Securities.

         The recitals contained in this Declaration and the Trust Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness.  The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Trust Securities.

SECTION 3.14     Duration of Trust.

         The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have perpetual existence.

SECTION 3.15     Mergers.

         (a)     The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).





                                       18
<PAGE>   24
         (b)     The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Trust Securities, the Delaware Trustee or the
Property Trustee, consolidate, amalgamate, merge with or into, or be replaced
by a trust organized as such under the laws of any State of the United States;
provided that:

                 (i)      if the Trust is not the survivor, such successor
         entity (the "Successor Entity") either:

                          (A)     expressly assumes all of the obligations of
                 the Trust under the Trust Securities; or

                          (B)     substitutes for the Trust Preferred
                 Securities other securities having substantially the same
                 terms as the Trust Preferred Securities (the "Successor Trust
                 Securities") so long as the Successor Trust Securities rank
                 the same as the Trust Preferred Securities rank with respect
                 to Distributions, assets and payments upon liquidation,
                 redemption and otherwise;

                 (ii)     the Company expressly acknowledges a trustee of the
         Successor Entity that possesses the same powers and duties as the
         Property Trustee as the Holder of the Partnership Preferred
         Securities;

                 (iii)    the Trust Preferred Securities or any Successor Trust
         Securities are listed, or any Successor Trust Securities will be
         listed upon notification of issuance, on any national securities
         exchange or with another organization on which the Trust Preferred
         Securities are then listed or quoted;

                 (iv)     such merger, consolidation, amalgamation or
         replacement does not cause the Trust Preferred Securities (including
         any Successor Trust Securities) to be downgraded by any nationally
         recognized statistical rating organization;

                 (v)      such merger, consolidation, amalgamation or
         replacement does not adversely affect the rights, preferences and
         privileges of the Holders of the Trust Preferred Securities (including
         any Successor Trust Securities) in any material respect;

                 (vi)     such Successor Entity has a purpose identical to that
         of the Trust;

                 (vii)    the Company guarantees the obligations of such
         Successor Entity under the Successor Trust Securities at least to the
         extent provided by the Trust Guarantees; and

                 (viii)   prior to such merger, consolidation, amalgamation or
         replacement, the Sponsor has received an opinion of a nationally
         recognized independent counsel (which may be counsel to the Sponsor)
         to the Trust experienced in such matters to the effect that:

                          (A)     such merger, consolidation, amalgamation or
                 replacement will not adversely affect the rights, preferences
                 and privileges of the Holders of the Trust Preferred
                 Securities (including any Successor Trust Securities) in any
                 material respect (other than with respect to any dilution of
                 the Holders' interest in the new entity);

                          (B)     following such merger, consolidation,
                 amalgamation or replacement, neither the Trust nor the
                 Successor Entity will be required to register as an Investment
                 Company under the 1940 Act;

                          (C)     following such merger, consolidation,
                 amalgamation or replacement, the Trust (or the Successor
                 Entity) will not be classified as an association or a publicly
                 traded partnership taxable as a corporation for United States
                 federal income tax purposes; and





                                       19
<PAGE>   25
                          (D)     following such merger, consolidation,
                 amalgamation or replacement, the Partnership will not be
                 classified as an association or a publicly traded partnership
                 taxable as a corporation for United States federal income tax
                 purposes.

         (c)     Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Trust
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or Successor Entity
to be classified as an association or a publicly traded partnership taxable as
a corporation for United States federal income tax purposes.


                                   ARTICLE IV
                                    SPONSOR

SECTION 4.1      Responsibilities of the Sponsor.

         In connection with the issue and sale of the Trust Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:

         (a)     To prepare for filing by the Trust with the Commission a
registration statement on Form S-1 or S-3 in relation to the Trust Preferred
Securities, including any amendments thereto;

         (b)     To determine the states in which to take appropriate action to
qualify or register for sale all or part of the Trust Preferred Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such states;

         (c)     To prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing upon notice of issuance of any Trust Preferred Securities;

         (d)     To prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Trust
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and

         (e)     To negotiate the terms of an underwriting agreement and any
pricing agreement providing for the sale of the Trust Preferred Securities.

SECTION 4.2      Indemnification and Expenses of the Trustee

         The Partnership agrees, and to the extent the Partnership fails to do
so, the Sponsor agrees to indemnify the Property Trustee and the Delaware
Trustee and their respective officers, directors, employees and agents for, and
to hold each of them harmless against, any loss, liability or expense incurred
without negligence or bad faith on the part of the Property Trustee or the
Delaware Trustee, as the case may be, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending either of them against any claim or liability
in connection with the exercise or performance of any of their respective
powers or duties hereunder; the provisions of this Section 4.2 shall survive
the resignation or removal of the Delaware Trustee or the Property Trustee or
the termination of this Declaration.





                                       20
<PAGE>   26
                                   ARTICLE V
                         TRUST COMMON SECURITIES HOLDER

SECTION 5.1      Company's Purchase of Trust Common Securities.

         On the Closing Date the Company will purchase all of the Trust Common
Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Trust Preferred Securities are
sold.

SECTION 5.2      Covenants of the Trust Common Securities Holder.

         For so long as the Trust Preferred Securities remain outstanding, the
Company will covenant (i) to maintain directly 100 percent ownership of the
Trust Common Securities, (ii) to cause the Trust to remain a statutory business
trust and not to voluntarily dissolve, wind up, liquidate, or be terminated,
except as permitted by this Declaration, (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be an investment company
for purposes of the 1940 Act, and (iv) to take no action which would be
reasonably likely to cause the Trust to be classified as an association or a
publicly traded partnership taxable as a corporation for United States federal
income tax purposes.


                                   ARTICLE VI
                                    TRUSTEES

SECTION 6.1      Number of Trustees.

         The number of Trustees initially shall be five (5), and:

         (a)     At any time before the issuance of any Trust Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and

         (b)     After the issuance of any Trust Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Trust Common Securities voting as a class at a
meeting of the Holders of the Trust Common Securities; provided, however, that
the number of Trustees shall in no event be less than three (3); provided
further that (1) if required by the Business Trust Act, one Trustee is the
Delaware Trustee; (2) there shall be at least one Trustee who is an employee or
officer of, or is affiliated with the Company (each, a "Regular Trustee"); and
(3) one Trustee shall be the Property Trustee for so long as this Declaration
is required to qualify as an indenture under the Trust Indenture Act, and such
Property Trustee may also serve as Delaware Trustee if it meets the applicable
requirements.

SECTION 6.2      Delaware Trustee.

         If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:

         (a)     A natural person who is a resident of the State of Delaware; or

         (b)     If not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,

provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee (in which case
Section 3.11 shall have no application).





                                       21
<PAGE>   27
SECTION 6.3      Property Trustee; Eligibility.

         (a)     There shall at all times be one Trustee which shall act as
Property Trustee which shall:

                 (i)      not be an Affiliate of the Sponsor; and

                 (ii)     be a corporation organized and doing business under
         the laws of the United States of America or any State or Territory
         thereof or of the District of Columbia, or a corporation or Person
         permitted by the Commission to act as an institutional trustee under
         the Trust Indenture Act, authorized under such laws to exercise
         corporate trust powers, having a combined capital and surplus of at
         least 50 million U.S. dollars ($50,000,000), and subject to
         supervision or examination by federal, state, territorial or District
         of Columbia authority.  If such corporation publishes reports of
         condition at least annually, pursuant to law or to the requirements of
         the supervising or examining authority referred to above, then for the
         purposes of this Section 6.3(a)(ii), the combined capital and surplus
         of such corporation shall be deemed to be its combined capital and
         surplus as set forth in its most recent report of condition so
         published.

         (b)     If at any time the Property Trustee shall cease to be eligible
to so act under Section 6.3(a), the Property Trustee shall immediately resign
in the manner and with the effect set forth in Section 6.7(c).

         (c)     If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Trust Common Securities (as if it were
the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.

         (d)     The Trust Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.

         (e)     The initial Property Trustee shall be:

                          The Chase Manhattan Bank

SECTION 6.4      Qualifications of Regular Trustees and Delaware Trustee
                 Generally.

         Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.

SECTION 6.5      Regular Trustees.

         The initial Regular Trustees shall be:
                          Phillip M. Sisneros
                          Susan K. Hodge
                          Keith A. Crane

         (a)     Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.

         (b)     Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any





                                       22
<PAGE>   28
documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6.

SECTION 6.6      Delaware Trustee.

         The initial Delaware Trustee shall be:

                          Chase Manhattan Bank Delaware

SECTION 6.7      Appointment, Removal and Resignation of Trustees.

         (a)     Subject to Section 6.7(b), Trustees may be appointed or
removed without cause at any time:

                 (i)      until the issuance of any Trust Securities, by
         written instrument executed by the Sponsor; and

                 (ii)     after the issuance of any Trust Securities, by vote
         of the Holders of a Majority in liquidation amount of the Trust Common
         Securities voting as a class at a meeting of the Holders of the Trust
         Common Securities.

         (b)     (i)      the Trustee that acts as Property Trustee shall not
         be removed in accordance with Section 6.7(a) until a successor Trustee
         possessing the qualifications to act as Property Trustee under Section
         6.3 (a "Successor Property Trustee") has been appointed and has
         accepted such appointment by written instrument executed by such
         Successor Property Trustee and delivered to the Regular Trustees and
         the Sponsor;

                 (ii)     the Trustee that acts as Delaware Trustee shall not
         be removed in accordance with Section 6.7(a) until a successor Trustee
         possessing the qualifications to act as Delaware Trustee under
         Sections 6.2 and 6.4 (a "Successor Delaware Trustee") has been
         appointed and has accepted such appointment by written instrument
         executed by such Successor Delaware Trustee and delivered to the
         Regular Trustees and the Sponsor;

                 (iii)    no such removal of the Property Trustee or the
         Delaware Trustee shall be effective until all of the fees, charges,
         and expenses such entity have been paid.

         (c)     A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:

                 (i)      no such resignation of the Trustee that acts as the
         Property Trustee shall be effective:

                          (A)     until a Successor Property Trustee has been
                 appointed and has accepted such appointment by instrument
                 executed by such Successor Property Trustee and delivered to
                 the Trust, the Sponsor and the resigning Property Trustee; or

                          (B)     until the assets of the Trust have been
                 completely liquidated and the proceeds thereof distributed to
                 the Holders of the Trust Securities; and

                 (ii)     no such resignation of the Trustee that acts as the
         Delaware Trustee shall be effective until a Successor Delaware Trustee
         has been appointed and has accepted such appointment by instrument





                                       23
<PAGE>   29
         executed by such Successor Delaware Trustee and delivered to the
         Trust, the Sponsor and the resigning Delaware Trustee; and

                 (iii)    no such resignation of the Property Trustee or the
         Delaware Trustee shall be effective until all of the fees, charges,
         and expenses such entity have been paid.

         (d)     The Holders of the Trust Common Securities shall use their
best efforts to promptly appoint a Successor Delaware Trustee or Successor
Property Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this Section
6.7.

         (e)     If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
6.7 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation, the resigning Property Trustee or Delaware Trustee, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee.  Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.

         (f)     No Property Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Property Trustee or successor
Delaware Trustee, as the case may be.

SECTION 6.8      Vacancies among Trustees.

         If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees
is increased pursuant to Section 6.1, a vacancy shall occur.  A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy.  The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.7.

SECTION 6.9      Effect of Vacancies.

         The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee
shall not operate to annul the Trust.  Whenever a vacancy in the number of
Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.7, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.

SECTION 6.10     Meetings.

         If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees.  Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
48 hours before such meeting.  Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting.  Notices shall contain a
brief statement of the time, place and anticipated purposes of the meeting.
The presence (whether in person or by telephone) of a Regular Trustee at a
meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened.  Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting





                                       24
<PAGE>   30
by the unanimous written consent of the Regular Trustees.  Notwithstanding the
foregoing, any and all actions of the Regular Trustees may be taken by the
unanimous written consent of all Regular Trustees.

SECTION 6.11     Delegation of Power.

         (a)     Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and

         (b)     The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.

SECTION 6.12     Merger, Conversion, Consolidation or Succession to Business.

         Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Property Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.

                                  ARTICLE VII
                                 DISTRIBUTIONS

SECTION 7.1      Distributions.

         (a)     Holders of Trust Securities shall be entitled to receive
cumulative cash distributions at the rate per annum of 8 1/8% of the stated
liquidation amount of $25 per Trust Security, calculated on the basis of a
360-day year consisting of twelve 30-day months.  For any period shorter than a
full 90-day quarter, distributions will be computed on the basis of the actual
number of days elapsed in such 90-day quarter.  Distributions shall be made on
the Trust Preferred Securities and the Trust Common Securities on a Pro Rata
basis.  Distributions on the Trust Securities shall, from the date of original
issue, accrue and be cumulative and shall be payable quarterly only to the
extent that the Trust has funds available for the payment of such Distributions
in the Property Account.  Distributions not paid on the scheduled payment date
will accumulate and compound quarterly at the rate of 8 1/8% per annum
("Compounded Distributions").  "Distributions" shall mean ordinary cumulative
distributions in respect of each Fiscal Period together with any Compounded
Distributions.  If and to the extent that the Partnership makes a distribution
on the Partnership Preferred Securities held by the Property Trustee or the
Company makes a payment under the Partnership Guarantee (the amount of any such
partnership distribution, including any compounded partnership distributions,
or guarantee payment being a "Payment Amount"), the Trust shall and the
Property Trustee is directed, to the extent funds are available for that
purpose pursuant to Section 7.1(c), to make a Pro Rata Distribution of the
Payment Amount to Holders.

         (b)     Distributions on the Trust Securities will be cumulative, will
accrue from the date of initial issuance and will be payable quarterly in
arrears on each March 31, June 30, September 30 and December 31, commencing
March 31, 1997, when, as and if available for payment, by the Property Trustee,
except as otherwise described below.  If Distributions are not paid when
scheduled, the accrued Distributions shall be paid to the Holders of record of
Trust Securities as they appear on the books and records of the Trust on the
record date as determined under Section 7.1(d) below.





                                       25
<PAGE>   31
         (c)     Amounts available to the Trust for distribution to the Holders
of the Trust Securities will be limited to payments received by the Trust from
the Partnership on the Partnership Preferred Securities or from the Company on
the Partnership Guarantees paid by the Company to the Trust.  If the Property
Trustee, as the holder of the Partnership Preferred Securities for the benefit
of the Holders of the Trust Securities, receives written notice of any
determination by the Partnership not to pay distributions on such Partnership
Preferred Securities, the Property Trustee shall give notice of such
determination to the Holders.

         (d)     Distributions on the Trust Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which relevant record dates, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates.  Such distributions will be paid through
the Property Trustee who will hold amounts received in respect of the
Partnership Preferred Securities in the Property Account for the benefit of the
Holders of the Trust Securities.  In the event that the Trust Securities do not
remain in book-entry only form, the relevant record dates shall be the 15th day
of the month of the relevant payment dates.  In the event that any date on
which distributions are payable on the Trust Securities is not a Business Day,
payment of the distribution payable on such date will be made on the next
succeeding day which is a Business Day (without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day (without any reduction in interest or other payments in
respect of such early payment).

                                  ARTICLE VIII
                          ISSUANCE OF TRUST SECURITIES

SECTION 8.1      Designation and General Provisions Regarding Trust Securities.

         (a)     The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial ownership
interests in the assets of the Trust (the "Trust Preferred Securities") and one
class of common securities representing undivided beneficial ownership
interests in the assets of the Trust (the "Trust Common Securities") as
follows:

                 (i)      Trust Preferred Securities.  6,000,000 Trust
         Preferred Securities of the Trust with an aggregate liquidation amount
         with respect to the assets of the Trust of one hundred fifty million
         dollars ($150,000,000) and a liquidation amount with respect to the
         assets of the Trust of $25 per preferred security, are hereby
         designated for the purpose of identification only as 8 1/8% Trust
         Originated Preferred SecuritiesSM (the "Trust Preferred Securities").
         The Trust Preferred Security Certificates evidencing the Trust
         Preferred Securities shall be substantially in the form of Exhibit A-1
         to the Declaration, with such changes and additions thereto or
         deletions therefrom as may be required by ordinary usage, custom or
         practice or to conform to the rules of any stock exchange on which the
         Trust Preferred Securities are listed.

                 (ii)     Trust Common Securities.  186,000 Trust Common
         Securities of the Trust with an aggregate liquidation amount with
         respect to the assets of the Trust of four million six hundred fifty
         thousand dollars ($4,650,000) and a liquidation amount with respect to
         the assets of the Trust of $25 per common security, are hereby
         designated for the purposes of identification only as 8 1/8% Trust
         Common Securities (the "Trust Common Securities" and, together with
         the Trust Preferred Securities, the "Trust Securities").  The Trust
         Common Security Certificates evidencing the Trust Common Securities
         shall be substantially in the form of Exhibit A-2 to the Declaration,
         with such changes and additions thereto or deletions therefrom as may
         be required by ordinary usage, custom or practice.

         (b)     Except as provided in Section 9.2(b) of this Declaration, the
Trust Preferred Securities rank pari passu and payment thereon shall be made
Pro Rata with the Trust Common Securities.  The Trust shall issue no securities
or other interests in the assets of the Trust other than the Trust Preferred
Securities and the Trust Common Securities.





                                       26
<PAGE>   32
         (c)     Any Regular Trustee shall sign the Trust Securities for the
Trust by manual or facsimile signature.  In case any Regular Trustee of the
Trust who shall have signed any of the Trust Securities shall cease to be a
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Trust Security, shall be the Regular Trustees
of the Trust, although at the date of the execution and delivery of the
Declaration any such person was not such a Regular Trustee.  Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation of any stock exchange on which Trust Securities may
be listed, or to conform to usage.

         A Trust Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Property Trustee.  Such signature
shall be conclusive evidence that the Trust Security has been authenticated
under this Declaration.

         Upon a written order of the Trust, signed by at least one Regular
Trustee, directing the Property Trustee to authenticate and deliver Trust
Securities, the Property Trustee shall authenticate and deliver the Trust
Securities for original issue.  The aggregate number of Trust Securities
outstanding at any time shall not exceed the number set forth in the Terms of
the Trust Securities.

         The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Trust Securities.  An authenticating agent may
authenticate Trust Preferred Securities whenever the Property Trustee may do
so.  Each reference in this Declaration to authentication by the Property
Trustee includes authentication by such agent.  An authenticating agent has the
same rights as the Property Trustee to deal with the Sponsor or an Affiliate of
the Sponsor.

         (d)     The consideration received by the Trust for the issuance of
the Trust Securities shall constitute a contribution to the capital of the
Trust and shall not constitute a loan to the Trust.

         (e)     Upon issuance of the Trust Securities as provided in this
Declaration, the Trust Securities so issued shall be deemed to be validly
issued, fully paid and non-assessable, subject to Section 11.1 with respect to
the Trust Common Securities.

         (f)     Every Person, by virtue of having become a Holder or a Trust
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.

SECTION 8.2      Redemption of Trust Securities.

         (a)     Upon a purchase of the Partnership Preferred Securities by the
Partnership upon redemption or otherwise, the proceeds from such purchase shall
be simultaneously applied Pro Rata to redeem Trust Securities having an
aggregate liquidation amount equal to the Partnership Preferred Securities so
purchased or redeemed for an amount equal to $25 per Trust Security plus an
amount equal to accrued and unpaid Distributions, including any Compounded
Distributions thereon through the date of the redemption or such lesser amount
as shall be received by the Trust in respect of the Partnership Preferred
Securities so purchased or redeemed  as calculated by the Regular Trustees (the
"Redemption Price").  Holders will be given not less than 30 nor more than 60
days notice of such redemption.

         (b)     If fewer than all the outstanding Trust Securities are to be
so redeemed, the Trust Common Securities and the Trust Preferred Securities
will be redeemed Pro Rata and the Trust Preferred Securities to be redeemed
will be redeemed as described in Section 8.3 below.





                                       27
<PAGE>   33
         (c)     If, at any time, a Trust Special Event shall occur and be
continuing, the Regular Trustees shall, unless the Partnership Preferred
Securities are redeemed in the limited circumstances described below, within 90
days following the occurrence of such Trust Special Event elect to either (i)
dissolve the Trust upon not less than 30 nor more than 60 days' notice with the
result that, after satisfaction of creditors, if any, of the Trust, Partnership
Preferred Securities with an aggregate principal amount equal to the aggregate
stated liquidation amount of, with a distribution rate identical to the
distribution rate of, and accrued and unpaid distributions equal to accrued and
unpaid distributions on, and having the same record date for payment as, the
Trust Preferred Securities and the Trust Common Securities outstanding at such
time would be distributed on a Pro Rata basis to the Holders of the Trust
Preferred Securities and the Trust Common Securities in liquidation of such
Holders' interests in the Trust; provided, however, that if at the time there
is available to the Trust the opportunity to eliminate, within such 90-day
period, the Trust Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure which in the sole judgment of the Sponsor has or will cause no adverse
effect on the Trust, the Partnership, the Sponsor or the Holders of the Trust
Securities and will involve no material cost, the Trust will pursue such
measure in lieu of dissolution or (ii) cause the Trust Preferred Securities to
remain outstanding, provided that in the case of this clause (ii), the Sponsor
shall pay any and all expenses incurred by or payable by the Trust attributable
to the Trust Special Event.  Furthermore, if in the case of the occurrence of a
Trust Tax Event, the Regular Trustees have received a Trust Redemption Tax
Opinion, then the General Partner shall have the right, within 90 days
following the occurrence of such Trust Tax Event, to elect to cause the
Partnership to redeem the Partnership Preferred Securities in whole (but not in
part) for cash upon not less than 30 nor more than 60 days' notice and promptly
following such redemption, the Trust Securities will be redeemed by the Trust
at the Redemption Price.

         (d)     If the Partnership Preferred Securities are distributed to the
Holders of the Trust Preferred Securities, the Sponsor will use its best
efforts to cause the Partnership Preferred Securities to be listed on the New
York Stock Exchange or on such other national securities exchange or similar
organization as the Trust Preferred Securities are then listed or quoted.

         (e)     On the date fixed for any distribution of Partnership
Preferred Securities, upon dissolution of the Trust, (i) the Trust Preferred
Securities and the Trust Common Securities will no longer be deemed to be
outstanding and (ii) certificates representing Trust Securities will be deemed
to represent the Partnership Preferred Securities having an aggregate principal
amount equal to the stated liquidation amount of, and bearing accrued and
unpaid distributions equal to accrued and unpaid distributions on, such Trust
Securities until such certificates are presented to the Sponsor or its agent
for transfer or reissuance.

SECTION 8.3      Redemption Procedures.

         (a)     Notice of any redemption of, or notice of distribution of
Partnership Preferred Securities in exchange for, the Trust Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail to each
Holder of Trust Securities to be redeemed or exchanged not fewer than 30 nor
more than 60 days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed for redemption of
the Partnership Preferred Securities.  For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are given
pursuant to this Section 8.3, a Redemption/ Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Trust Securities.  Each Redemption/Distribution Notice
shall be addressed to the Holders of Trust Securities at the address of each
such Holder appearing in the books and records of the Trust.  No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.

         (b)     In the event that fewer than all the outstanding Trust
Securities are to be redeemed, the Trust Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Trust Securities, provided that, in
respect of Trust Preferred Securities registered in the name of and held of
record by DTC or its nominee (or any successor Clearing Agency or its nominee)
or any nominee, the distribution of the proceeds of such redemption





                                       28
<PAGE>   34
will be made to each Clearing Agency Participant (or Person on whose behalf
such nominee holds such securities) in accordance with the procedures applied
by such agency or nominee.

         (c)     If Trust Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Partnership Preferred Securities are redeemed as set out in this Section 8.3
(which notice will be irrevocable), then (A) while the Trust Preferred
Securities are in book-entry only form, by 12:00 noon, New York City time, on
the redemption date, the Property Trustee will deposit irrevocably with the DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient
to pay the applicable Redemption Price with respect to the Trust Preferred
Securities and will give the DTC irrevocable instructions and authority to pay
the Redemption Price to the Holders of the Trust Preferred Securities, and (B)
with respect to Trust Preferred Securities issued in definitive form and Trust
Common Securities, the Property Trustee will pay the relevant Redemption Price
to the Holders of such Trust Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the
redemption date.  If a Redemption/Distribution Notice shall have been given and
funds deposited as required, if applicable, then immediately prior to the close
of business on the date of such deposit, or on the redemption date, as
applicable, distributions will cease to accrue on the Trust Securities so
called for redemption and all rights of Holders of such Trust Securities will
cease, except the right of the Holders of such Trust Securities to receive the
Redemption Price, but without interest on such Redemption Price.  If any date
fixed for redemption of Trust Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day (without any reduction in interest or other payments in respect of such
early payment).  If payment of the Redemption Price in respect of any Trust
Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant Trust
Guarantee, Distributions on such Trust Securities will continue to accrue at
the then applicable rate from the original redemption date to the actual date
of payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption Price.  For
these purposes, the applicable Redemption Price shall not include Distributions
which are being paid to Holders who were Holders on a relevant record date.
Upon satisfaction of the foregoing conditions, then immediately prior to the
close of business on the date of such deposit or payment, all rights of Holders
of such Trust Preferred Securities so called for redemption will cease, except
the right of the Holders to receive the Redemption Price, but without interest
on such Redemption Price, and from and after the date fixed for redemption,
such Trust Preferred Securities will not accrue distributions or bear interest.

         Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Trust Securities that
have been called for redemption.

         (d)     Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), the Company or its
subsidiaries may at any time and from time to time purchase outstanding Trust
Preferred Securities by tender, in the open market or by private agreement.

SECTION 8.4      Voting Rights of Trust Preferred Securities.

         (a)     Except as provided under Sections 2.6,  6.1(b) and this
Article VIII and as otherwise required by the Business Trust Act, the Trust
Indenture Act and other applicable law, the Holders of the Trust Preferred
Securities will have no voting rights.

         (b)     Subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in Section 8.4(d) below, the
Holders of a Majority in liquidation amount of the Trust Preferred Securities
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as Holder of
the Partnership Preferred Securities, to (i) exercise the remedies available to
it under the Limited Partnership Agreement as a Holder of the Partnership
Preferred Securities, including the right to direct the Special Representative
of the Partnership as elected by the





                                       29
<PAGE>   35
Holders of the Partnership Preferred Securities in accordance with the Limited
Partnership Agreement (A) to enforce the Partnership's creditors rights and
other rights with respect to the Affiliate Investment Instruments and any
Investment Guarantees, (B) to enforce the rights of the Holders of the
Partnership Preferred Securities under the Partnership Guarantee, and (C) to
enforce the rights of the Holders of the Partnership Preferred Securities to
receive distributions (if and to the extent such distributions have been
declared out of funds legally available therefor by the General Partner in its
sole discretion) on the Partnership Preferred Securities or (ii) consent to any
amendment, modification, or termination of the Limited Partnership Agreement or
the Partnership Preferred Securities where such consent shall be required;
provided, however, that where a consent or action under the Limited Partnership
Agreement would require the consent or act of the Holders of more than a
majority of the aggregate liquidation amount of Partnership Preferred
Securities affected thereby, only the Holders of the percentage of the
aggregate stated liquidation amount of the Trust Preferred Securities which is
at least equal to the percentage required under the Limited Partnership
Agreement may direct the Property Trustee to give such consent or take such
action.

         (c)     If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Preferred
Securities has made a written request, such Holder of record of Trust Preferred
Securities may institute a legal proceeding directly against the General
Partner or the Special Representative, to enforce the Property Trustee's rights
under the Limited Partnership Agreement without first instituting any legal
proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Investment
Instrument, then a Holder of Trust Preferred Securities may directly institute
a proceeding against such Investment Affiliate for enforcement of payment with
respect to such Affiliate Investment Instrument.

         (d)     The Property Trustee shall notify all Holders of the Trust
Preferred Securities of any notice of any Partnership Enforcement Event
received from the General Partner with respect to the Partnership Preferred
Securities and the Affiliate Investment Instruments.  Such notice shall state
that such Partnership Enforcement Event also constitutes a Trust Enforcement
Event.  Except with respect to directing the time, method, and place of
conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 8.4(b)(i) and (ii)
above unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that as a result of such action, the Trust will not be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes and each Holder will
be treated as owning an undivided beneficial ownership interest in the
Partnership Preferred Securities.

         (e)     In the event the consent of the Property Trustee, as the
Holder of the Partnership Preferred Securities, is required under the Limited
Partnership Agreement with respect to any amendment, modification or
termination of the Limited Partnership Agreement, the Property Trustee shall
request the direction of the Holders of the Trust Securities with respect to
such amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Trust Securities voting together as a single class; provided,
however, that where a consent under the Limited Partnership Agreement would
require the consent of the Holders of more than a majority of the aggregate
principal amount of the Partnership Preferred Securities, the Property Trustee
may only give such consent at the direction of the Holders of at least the same
proportion in aggregate stated liquidation amount of the Trust Securities.  The
Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Trust Securities unless the Property Trustee
has obtained an opinion of tax counsel to the effect that as a result of such
action, the Trust will not be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.

         (f)     A waiver of a Partnership Enforcement Event with respect to
the Partnership Preferred Securities will constitute a waiver of the
corresponding Trust Enforcement Event.

         (g)     Any required approval or direction of Holders of Trust
Preferred Securities may be given at a separate meeting of Holders of Trust
Preferred Securities convened for such purpose, at a meeting of all of the





                                       30
<PAGE>   36
Holders of Trust Securities or pursuant to written consent.  The Regular
Trustees will cause a notice of any meeting at which Holders of Trust Preferred
Securities are entitled to vote, or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed to each Holder of record
of Trust Preferred Securities.  Each such notice will include a statement
setting forth the following information:  (i) the date of such meeting or the
date by which such action is to be taken; (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought; and (iii)
instructions for the delivery of proxies or consents.

         (h)     No vote or consent of the Holders of Trust Preferred
Securities will be required for the Trust to redeem and cancel Trust Preferred
Securities or distribute Partnership Preferred Securities in accordance with
the Declaration.

         (i)     Notwithstanding that Holders of Trust Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Trust Securities that are owned at such time by the Company or any
entity directly or indirectly controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Trust Securities
were not outstanding, provided, however that persons otherwise eligible to vote
to whom the Company or any of its subsidiaries have pledged Trust Preferred
Securities may vote or consent with respect to such pledged Trust Preferred
Securities under any of the circumstances described herein.

         (j)     Holders of the Trust Preferred Securities will have no rights
to appoint or remove the Regular Trustees, who may be appointed, removed or
replaced solely by the Company, as the Holder of all of the Trust Common
Securities.

SECTION 8.5      Voting Rights of Trust Common Securities.

         (a)     Except as provided under this Section 8.5 or as otherwise
required by the Business Trust Act, the Trust Indenture Act or other applicable
law or provided by the Declaration, the Holders of the Trust Common Securities
will have no voting rights.

         (b)     The Holders of the Trust Common Securities are entitled,
subject to Article VI hereof, to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees.

         (c)     Subject to Section 2.6 of the Declaration and only after all
Trust Enforcement Events with respect to the Trust Preferred Securities have
been cured, waived, or otherwise eliminated and subject to the requirement of
the Property Trustee obtaining a tax opinion in certain circumstances set forth
in this paragraph (c), the Holders of a Majority in liquidation amount of the
Trust Common Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Partnership Preferred Securities, to (i) exercise the remedies
available to it under the Limited Partnership Agreement as a Holder of the
Partnership Preferred Securities, including the right to direct the Special
Representative of the Partnership as elected by the Holders of the Partnership
Preferred Securities in accordance with the Limited Partnership Agreement (A)
to enforce the Partnership's creditors rights and other rights with respect to
the Affiliate Investment Instruments and any Investment Guarantees, (B) to
enforce the rights of the Holders of the Partnership Preferred Securities under
the Partnership Guarantee, and (C) to enforce the rights of the Holders of the
Partnership Preferred Securities to receive distributions (if and to the extent
such distributions have been declared out of funds legally available therefor
by the General Partner in its sole discretion) on the Partnership Preferred
Securities or (ii) consent to any amendment, modification, or termination of
the Limited Partnership Agreement or the Partnership Preferred Securities where
such consent shall be required; provided, however, that where a consent or
action under the Limited Partnership Agreement would require the consent or act
of the Holders of more than a majority of the aggregate liquidation amount of
Partnership Preferred Securities affected thereby, only the Holders of the
percentage of the aggregate stated liquidation amount of the Trust Common
Securities which is at least equal to the percentage required under the Limited
Partnership Agreement





                                       31
<PAGE>   37
may direct the Property Trustee to give such consent or take such action.
Except with respect to directing the time, method, and place of conducting a
proceeding for a remedy, the Property Trustee shall be under no obligation to
take any of the actions described in clause 8.5(c)(i) and (ii) above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that, as a result of such action, for United States federal income tax
purposes the Trust will not be classified as an association or a publicly
traded partnership taxable as a corporation.

         (d)     If the Property Trustee fails to enforce its rights under the
Partnership Preferred Securities after a Holder of record of Trust Common
Securities has made a written request, such Holder of record of Trust Common
Securities may directly institute a legal proceeding directly against the
Company, as General Partner of the Partnership or the Special Representative,
to enforce the Property Trustee's rights under the Partnership Preferred
Securities without first instituting any legal proceeding against the Property
Trustee or any other person or entity.  Notwithstanding the foregoing, if a
Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of an Investment Affiliate to make any required
payment when due on any Affiliate Investment Instrument, then a Holder of Trust
Common Securities may directly institute a proceeding against such Investment
Affiliate for enforcement of payment with respect to such Affiliate Investment
Instrument.

         (e)     A waiver of a Partnership Enforcement Event with respect to
the Partnership Preferred Securities will constitute a waiver of the
corresponding Trust Enforcement Event.

         (f)     Any required approval or direction of Holders of Trust Common
Securities may be given at a separate meeting of Holders of Trust Common
Securities convened for such purpose, at a meeting of all of the Holders of
Trust Securities or pursuant to written consent.  The Regular Trustees will
cause a notice of any meeting at which Holders of Trust Common Securities are
entitled to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Trust Common
Securities.  Each such notice will include a statement setting forth the
following information:  (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents.

         (g)     No vote or consent of the Holders of the Trust Common
Securities shall be required for the Trust to redeem and cancel Trust Common
Securities or to distribute Partnership Preferred Securities in accordance with
the Declaration and the terms of the Trust Securities.

SECTION 8.6      Paying Agent.

         In the event that the Trust Preferred Securities are not in book-entry
only form, the Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York, an office or agency where the Trust Preferred
Securities may be presented for payment ("Paying Agent).  The Trust may appoint
the Paying Agent and may appoint one or more additional paying agents in such
other locations as it shall determine.  The term "Paying Agent" includes any
additional paying agent.  The Trust may change any Paying Agent without prior
notice to any Holder.  The Trust shall notify the Property Trustee of the name
and address of any Paying Agent not a party to this Declaration.  If the Trust
fails to appoint or maintain another entity as Paying Agent, the Property
Trustee shall act as such.  The Trust or any of its Affiliates may act as
Paying Agent.  The Chase Manhattan Bank shall initially act as Paying Agent for
the Trust Preferred Securities and the Trust Common Securities.

SECTION 8.7      Listing

         The Sponsor shall use its best efforts to cause the Trust Preferred
Securities to be listed for quotation on the New York Stock Exchange.





                                       32
<PAGE>   38
SECTION 8.8      Acceptance of Guarantee and Agreements, Limited Partnership
Agreement.

         Each Holder of Trust Preferred Securities and Trust Common Securities,
by the acceptance thereof, agrees to the provisions of the applicable Trust
Guarantee, the Partnership Guarantee, and the Investment Guarantee,
respectively, including the subordination provisions therein.

                                   ARTICLE IX
                    TERMINATION AND LIQUIDATION OF THE TRUST

SECTION 9.1      Termination of Trust.

         (a)     The Trust shall terminate:

                 (i)      upon the bankruptcy, insolvency or dissolution of the
         Holder of Trust Common Securities or the Sponsor;

                 (ii)     upon the filing of a certificate of dissolution or
         its equivalent with respect to the Sponsor, the filing of a
         certificate of cancellation with respect to the Trust after having
         obtained the consent of at least a Majority in liquidation amount of
         the Trust Securities, voting together as a single class, to file such
         certificate of cancellation, or the revocation of the Sponsor's
         charter and the expiration of 90 days after the date of revocation
         without a reinstatement thereof;

                 (iii)    upon the entry of a decree of judicial dissolution of
         the Sponsor or the Trust;

                 (iv)     when all of the Trust Securities shall have been
         called for redemption and the amounts necessary for redemption thereof
         shall have been paid to the Holders in accordance with the terms of
         the Trust Securities;

                 (v)      upon the election of the Regular Trustees, following
         the occurrence and continuation of a Trust Special Event, pursuant to
         which the Trust shall have been dissolved in accordance with the terms
         of the Trust Securities and all of the Partnership Preferred
         Securities shall have been distributed to the Holders of Trust
         Securities in exchange for all of the Trust Securities; or

                 (vi)     before the issuance of any Trust Securities, with the
         consent of all of the Regular Trustees and the Sponsor.

         (b)     As soon as is practicable after the occurrence of an event
referred to in Section 9.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.

         (c)     The provisions of Section 3.9 and Article XI shall survive the
termination of the Trust.

SECTION 9.2      Liquidation Distribution Upon Termination and Dissolution of
                 the Trust.

         (a)     In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (each a "Trust
Liquidation"), the Holders of the Trust Preferred Securities on the date of the
Trust Liquidation will be entitled to receive, out of the assets of the Trust
available for distribution to Holders of Trust Securities after satisfaction of
the Trusts' liabilities and creditors, distributions in cash or other
immediately available funds in an amount equal to the aggregate of the stated
liquidation amount of $25 per Trust Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Trust
Liquidation Distribution"), unless, in connection with such Trust Liquidation,
Partnership Preferred Securities in an aggregate stated liquidation amount
equal to the aggregate stated liquidation amount of, with a distribution rate
identical to the distribution rate of, and accrued and unpaid distributions
equal to accrued and unpaid distributions on, such





                                       33
<PAGE>   39
Trust Securities shall be distributed on a Pro Rata basis to the Holders of the
Trust Securities in exchange for such Trust Securities.

         (b)     If, upon any such Trust Liquidation, the Trust Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Trust Liquidation Distribution, then,
except as provided below, the amounts payable directly by the Trust on the
Trust Securities shall be paid on a Pro Rata basis.  The Holders of the Trust
Common Securities will be entitled to receive distributions upon any such Trust
Liquidation Pro Rata with the Holders of the Trust Preferred Securities except
that if the Company is in default on any of its obligations under the Trust
Preferred Securities Guarantee, the Partnership Guarantee, or any Investment
Guarantee, or any Investment Event of Default has occurred and is continuing
with respect to an Affiliate Investment Instrument, the Trust Preferred
Securities shall have a preference over the Trust Common Securities with regard
to such distributions as provided below.  Such preference is effectuated by the
Holder of the Trust Common Securities hereby agreeing to provide limited
recourse guarantees as follows:  (i) to the Holders of the Trust Preferred
Securities, of the Company's obligations under the Trust Preferred Securities
Guarantee; (ii) to the Trust and the Holders of the Trust Preferred Securities,
of the Company's obligations under the Partnership Guarantee; and (iii) to the
Partnership and the Holders of the Trust Preferred Securities, of the Company's
obligations under any Investment Guarantee and/or the obligations of any
Investment Affiliate under an Affiliate Investment Instrument.  In the case of
the limited recourse guarantee given by the Holder of the Trust Common
Securities to the Partnership and the Holder of the Trust Preferred Securities
in respect of the Company's obligations under any Investment Guarantee and/or
any Investment Affiliate's obligations under an Affiliate Investment
Instrument, (i) the Trust Common Securities Holder will be deemed to have
pledged the amount due in respect of its Trust Common Securities upon a
liquidation of the Trust to the Partnership and the Holders of Trust Preferred
Securities; (ii) the Trust Common Securities Holder will be deemed to have paid
such amount to the Partnership in respect of such defaulted Investment
Guarantee and/or Affiliate Investment Instrument, as the case may be; (iii) the
Partnership will be deemed to have paid such amount to the Trust; and (iv) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of Trust Preferred Securities (on a pro rata basis among such Trust Preferred
Securities Holders) in respect of the Trust Common Securities Holder's pledge
of such amounts to such Trust Preferred Securities Holders.  In the case of a
limited recourse guarantee given by the Holder of the Trust Common Securities
to the Trust and the Holders of the Trust Preferred Securities in respect of
the Company's obligations under the Partnership Guarantee, (i) the Holder of
the Trust Common Securities will be deemed to have pledged the amount due in
respect of its Trust Common Securities upon a liquidation of the Trust to the
Trust and the Holders of the Trust Preferred Securities; (ii) the Holder of the
Trust Common Securities will be deemed to have paid such amount to the Trust in
respect of its obligations under the Partnership Guarantee; and (iii) the
Property Trustee is hereby authorized to distribute such amount to the Holders
of the Trust Preferred Securities (on a pro rata basis among such Trust
Preferred Securities Holders) in respect of the Trust Common Securities
Holder's pledge of such amount to such Trust Preferred Securities Holders.


                                   ARTICLE X
                             TRANSFER OF INTERESTS

SECTION 10.1     Transfer of Trust Securities.

         (a)     Trust Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and
in the terms of the Trust Securities.  Any transfer or purported transfer of
any Trust Security not made in accordance with this Declaration shall be null
and void.

         (b)     Subject to this Article X, Trust Preferred Securities shall be
freely transferable.





                                       34
<PAGE>   40
SECTION 10.2     Transfer of Certificates.

         The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it.  Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees.  Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing.  Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees.  A transferee of a Certificate shall be
entitled to the rights and be subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate.  By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.

SECTION 10.3     Deemed Security Holders.

         The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole Holder of such
Certificate and of the Trust Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Trust Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

SECTION 10.4     Book-Entry Interests.

         Unless otherwise specified in the terms of the Trust Preferred
Securities, the Trust Preferred Securities Certificates, on original issuance,
will be issued in the form of one or more fully registered, global Trust
Preferred Security Certificates (each a "Global Certificate"), to be delivered
to DTC, the initial Clearing Agency, by, or on behalf of, the Trust.  Such
Global Certificates shall initially be registered on the books and records of
the Trust in the name of Cede & Co., the nominee of DTC, and no Trust Preferred
Security Beneficial Owner will receive a definitive Trust Preferred Security
Certificate representing such Trust Preferred Security Beneficial Owner's
interests in such Global Certificates, except as provided in Section 10.7.
Unless and until definitive, fully registered Trust Preferred Security
Certificates (the "Definitive Trust Preferred Security Certificates") have been
issued to the Trust Preferred Security Beneficial Owners pursuant to Section
10.7:

         (a)     the provisions of this Section 10.4 shall be in full force and
effect;

         (b)     the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Trust Preferred Securities and the
sole Holder of the Global Certificates and shall have no obligation to the
Trust Preferred Security Beneficial Owners;

         (c)     to the extent that the provisions of this Section 10.4
conflict with any other provisions of this Declaration, the provisions of this
Section 10.4 shall control; and

         (d)     the rights of the Trust Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Trust Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and the Clearing Agency shall receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency Participants.
The Clearing Agency will make book-entry transfers among the Clearing Agency
Participants; provided, that solely for the purposes of determining whether the
Holders of the requisite amount of Trust Preferred Securities have voted on any
matter provided for in this Declaration, so long as Definitive Trust Preferred
Security Certificates have not been issued, the Trustees may conclusively rely
on, and shall be fully  protected in relying





                                       35
<PAGE>   41
on, any written instrument (including a proxy) delivered to the Trustees by the
Clearing Agency setting forth the Trust Preferred Security Beneficial Owners'
votes or assigning the right to vote on any matter to any other Persons either
in whole or in part.

SECTION 10.5     Notices to Clearing Agency.

         Whenever a notice or other communication to the Trust Preferred
Security Holders is required under this Declaration, unless and until
Definitive Trust Preferred Security Certificates shall have been issued to the
Trust Preferred Security Beneficial Owners pursuant to Section 10.7, the
Regular Trustees shall give all such notices and communications specified
herein to be given to the Trust Preferred Security Holders to the Clearing
Agency, and shall have no notice obligations to the Trust Preferred Security
Beneficial Owners.

SECTION 10.6     Appointment of Successor Clearing Agency.

         If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities, the
Regular Trustees may, in their sole discretion, appoint a successor Clearing
Agency with respect to such Trust Preferred Securities.

SECTION 10.7     Definitive Trust Preferred Security Certificates.

         If (a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Trust Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 10.6;  (b) the Regular Trustees elect after
consultation with the Sponsor to terminate the book-entry system through the
Clearing Agency with respect to the Trust Preferred Securities; or (c) there is
a Trust Enforcement Event (to the extent required by the Clearing Agency),
then:

                 (i)      Definitive Trust Preferred Security Certificates
         shall be prepared by the Regular Trustees on behalf of the Trust with
         respect to such Trust Preferred Securities; and

                 (ii)     upon surrender of the Global Certificates by the
         Clearing Agency, accompanied by registration instructions, the Regular
         Trustees shall cause Definitive Trust Preferred Security Certificates
         to be delivered to Trust Preferred Security Beneficial Owners in
         accordance with the instructions of the Clearing Agency.  Neither the
         Trustees nor the Trust shall be liable for any delay in delivery of
         such instructions and each of them may conclusively rely on and shall
         be protected in relying on, said instructions of the Clearing Agency.
         The Definitive Trust Preferred Security Certificates shall be printed,
         lithographed or engraved or may be produced in any other manner as is
         reasonably acceptable to the Regular Trustees, as evidenced by their
         execution thereof, and may have such letters, numbers or other marks
         of identification or designation and such legends or endorsements as
         the Regular Trustees may deem appropriate, or as may be required to
         comply with any law or with any rule or regulation made pursuant
         thereto or with any rule or regulation of any stock exchange on which
         Trust Preferred Securities may be listed, or to conform to usage.

SECTION 10.8     Mutilated, Destroyed, Lost or Stolen Certificates.

         If (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and (b)
there shall be delivered to the Regular Trustees such security or indemnity as
may be required by them to keep each of them harmless, then, in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
any Regular Trustee on behalf of the Trust shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination.  In connection with the
issuance of any new Certificate under this Section 10.8, the Regular Trustees
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.  Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive
evidence of an ownership interest





                                       36
<PAGE>   42
in the relevant Trust Securities, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.


                                   ARTICLE XI
                           LIMITATION OF LIABILITY OF
                HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS

SECTION 11.1     Liability.

         (a)     Except as expressly set forth in this Declaration, the Trust
Guarantees and the terms of the Trust Securities, the Sponsor and the Trustees
shall not be:

                 (i)      personally liable for the return of any portion of
         the capital contributions (or any return thereon) of the Holders of
         the Trust Securities which shall be made solely from assets of the
         Trust; and

                 (ii)     required to pay to the Trust or to any Holder of
         Trust Securities any deficit upon dissolution of the Trust or
         otherwise.

         (b)     Notwithstanding any other provision herein, the Holder of the
Trust Common Securities, by entering into this Agreement, agrees that it shall
be liable directly to any creditor or claimant of or against the Trust for the
entire amount of all of the debts and obligations of the Trust (other than
obligations to the Holders of Trust Securities in their capacities as Holders)
to the extent not satisfied out of the Trust's assets as if the Holder of the
Trust Common Securities were the General Partner of a limited partnership
organized under the Delaware Revised Uniform Limited Partnership Act.  This
Section 11.1(b) will automatically terminate upon (i) the adoption of final or
temporary United States federal tax regulations which, if the Trust were not
classified as a grantor trust for United States federal income tax purposes,
would result in the classification of the Trust as a partnership for United
States federal tax purposes without regard to its organic characteristics and
(ii) the taking of such action, if any, by the Trust or the Holders of Trust
Securities as may be necessary to achieve such classification.

         (c)     Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Trust Preferred Securities shall be entitled to the same
limitation of personal liability extended to shareholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.

SECTION 11.2     Exculpation.

         (a)     No Company Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Company Indemnified Person in good faith on behalf of the Trust
and in a manner such Company Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Company Indemnified Person
by this Declaration or by law, except that a Company Indemnified Person shall
be liable for any such loss, damage or claim incurred by reason of such Company
Indemnified Person's gross negligence or willful misconduct with respect to
such acts or omissions.

         (b)     An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Trust Securities might properly be paid.





                                       37
<PAGE>   43
SECTION 11.3     Fiduciary Duty.

         (a)     To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration.  The provisions
of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.

         (b)     Unless otherwise expressly provided herein:

                 (i)      whenever a conflict of interest exists or arises
         between an Indemnified Person and any Covered Person; or

                 (ii)     whenever this Declaration or any other agreement
         contemplated herein or therein provides that an Indemnified Person
         shall act in a manner that is, or provides terms that are, fair and
         reasonable to the Trust or any Holder of Trust Securities,

the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles.  In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.

         (c)     Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:

                 (i)      in its "discretion" or under a grant of similar
         authority, the Indemnified Person shall be entitled to consider such
         interests and factors as it desires, including its own interests, and
         shall have no duty or obligation to give any consideration to any
         interest of or factors affecting the Trust or any other Person; or

                 (ii)     in its "good faith" or under another express
         standard, the Indemnified Person shall act under such express standard
         and shall not be subject to any other or different standard imposed by
         this Declaration or by applicable law.

SECTION 11.4     Indemnification.

         (a)     (i)      To the fullest extent permitted by applicable law,
         the Sponsor shall indemnify and hold harmless any Company Indemnified
         Person who was or is a party or is threatened to be made a party to
         any threatened, pending or completed action, suit or proceeding,
         whether civil, criminal, administrative or investigative (other than
         an action by or in the right of the Trust) by reason of the fact that
         he is or was a Company Indemnified Person against expenses (including
         attorneys' fees), judgments, fines and amounts paid in settlement
         actually and reasonably incurred by him in connection with such
         action, suit or proceeding if he acted in good faith and in a manner
         he reasonably believed to be in or not opposed to the best interests
         of the Trust, and, with respect to any criminal action or proceeding,
         had no reasonable cause to believe his conduct was unlawful.  The
         termination of any action, suit or proceeding by judgment, order,
         settlement, conviction, or upon a plea of nolo contendere or its
         equivalent, shall not, of itself, create a presumption that the
         Company Indemnified Person did not act in good faith and in a manner
         which he reasonably believed to be in or not opposed to the best
         interests of the Trust, and, with respect to any criminal action or
         proceeding, had reasonable cause to believe that his conduct was
         unlawful.





                                       38
<PAGE>   44
                 (ii)     The Sponsor shall indemnify, to the fullest extent
         permitted by law, any Company Indemnified Person who was or is a party
         or is threatened to be made a party to any threatened, pending or
         completed action or suit by or in the right of the Trust to procure a
         judgment in its favor by reason of the fact that he is or was a
         Company Indemnified Person against expenses (including attorneys'
         fees) actually and reasonably incurred by him in connection with the
         defense or settlement of such action or suit if he acted in good faith
         and in a manner he reasonably believed to be in or not opposed to the
         best interests of the Trust and except that no such indemnification
         shall be made in respect of any claim, issue or matter as to which
         such Company Indemnified Person shall have been adjudged to be liable
         to the Trust unless and only to the extent that the Court of Chancery
         of Delaware or the court in which such action or suit was brought
         shall determine upon application that, despite the adjudication of
         liability but in view of all the circumstances of the case, such
         person is fairly and reasonably entitled to indemnity for such
         expenses which such Court of Chancery or such other court shall deem
         proper.

                 (iii)    To the extent that a Company Indemnified Person shall
         be successful on the merits or otherwise (including dismissal of an
         action without prejudice or the settlement of an action without
         admission of liability) in defense of any action, suit or proceeding
         referred to in paragraphs (i) and (ii) of this Section 11.4(a), or in
         defense of any claim, issue or matter therein, he shall be
         indemnified, to the fullest extent permitted by law, against expenses
         (including attorneys' fees) actually and reasonably incurred by him in
         connection therewith.

                 (iv)     Any indemnification under paragraphs (i) and (ii) of
         this Section 11.4(a) (unless ordered by a court) shall be made by the
         Sponsor only as authorized in the specific case upon a determination
         that indemnification of the Company Indemnified Person is proper in
         the circumstances because he has met the applicable standard of
         conduct set forth in paragraphs (i) and (ii).  Such determination
         shall be made (1) by the Regular Trustees by a majority vote of a
         quorum consisting of such Regular Trustees who were not parties to
         such action, suit or proceeding, (2) if such a quorum is not
         obtainable, or, even if obtainable, if a quorum of disinterested
         Regular Trustees so directs, by independent legal counsel in a written
         opinion, or (3) by the Holder of the Trust Common Securities.

                 (v)      Expenses (including attorneys' fees) incurred by a
         Company Indemnified Person in defending a civil, criminal,
         administrative or investigative action, suit or proceeding referred to
         in paragraphs (i) and (ii) of this Section 11.4(a) shall be paid by
         the Sponsor in advance of the final disposition of such action, suit
         or proceeding upon receipt of an undertaking by or on behalf of such
         Company Indemnified Person to repay such amount if it shall ultimately
         be determined that he is not entitled to be indemnified by the Sponsor
         as authorized in this Section 11.4(a).  Notwithstanding the foregoing,
         no advance shall be made by the Sponsor if a determination is
         reasonably and promptly made (i) by the Regular Trustees by a majority
         vote of a quorum of disinterested Regular Trustees, (ii) if such a
         quorum is not obtainable, or, even if obtainable, if a quorum of
         disinterested Regular Trustees so directs, by independent legal
         counsel in a written opinion or (iii) the Holder of the Trust Common
         Securities, that, based upon the facts known to the Regular Trustees,
         counsel or the Holder of the Trust Common Securities at the time such
         determination is made, such Company Indemnified Person acted in bad
         faith or in a manner that such person did not believe to be in or not
         opposed to the best interests of the Trust, or, with respect to any
         criminal proceeding, that such Company Indemnified Person believed or
         had reasonable cause to believe his conduct was unlawful.  In no event
         shall any advance be made in instances where the Regular Trustees,
         independent legal counsel or Holder of the Trust Common Securities
         reasonably determine that such person deliberately breached his duty
         to the Trust or Holders of Trust Common Securities.

                 (vi)     The indemnification and advancement of expenses
         provided by, or granted pursuant to, the other paragraphs of this
         Section 11.4(a) shall not be deemed exclusive of any other rights to
         which those seeking indemnification and advancement of expenses may be
         entitled under any agreement, vote of shareholders or disinterested
         directors of the Sponsor or Holders of the Trust Preferred Securities
         or otherwise, both as to action in his official capacity and as to
         action in another capacity while holding such





                                       39
<PAGE>   45
         office.  All rights to indemnification under this Section 11.4(a)
         shall be deemed to be provided by a contract between the Sponsor and
         each Company Indemnified Person who serves in such capacity at any
         time while this Section 11.4(a) is in effect.  Any repeal or
         modification of this Section 11.4(a) shall not affect any rights or
         obligations then existing.

                 (vii)    The Sponsor or the Trust may purchase and maintain
         insurance on behalf of any person who is or was a Company Indemnified
         Person against any liability asserted against him and incurred by him
         in any such capacity, or arising out of his status as such, whether or
         not the Sponsor would have the power to indemnify him against such
         liability under the provisions of this Section 11.4(a).

                 (viii)   For purposes of this Section 11.4(a), references to
         "the Trust" shall include, in addition to the resulting or surviving
         entity, any constituent entity (including any constituent of a
         constituent) absorbed in a consolidation or merger, so that any person
         who is or was a director, trustee, officer or employee of such
         constituent entity, or is or was serving at the request of such
         constituent entity as a director, trustee, officer, employee or agent
         of another entity, shall stand in the same position under the
         provisions of this Section 11.4(a) with respect to the resulting or
         surviving entity as he would have with respect to such constituent
         entity if its separate existence had continued.

                 (ix)     The indemnification and advancement of expenses
         provided by, or granted pursuant to, this Section 11.4(a) shall,
         unless otherwise provided when authorized or ratified, continue as to
         a person who has ceased to be a Company Indemnified Person and shall
         inure to the benefit of the heirs, executors and administrators of
         such a person.

         (b)     The Sponsor agrees to indemnify the (i) Property Trustee, (ii)
the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, damage, claim,
liability or expense including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or bad faith on the part of the
Fiduciary Indemnified Person arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.  The
obligation to indemnify as set forth in this Section 11.4(b) shall survive the
satisfaction and discharge of this Declaration.

SECTION 11.5     Outside Businesses.

         Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders of Trust Securities
shall have no rights by virtue of this Declaration in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any
such venture, even if competitive with the business of the Trust, shall not be
deemed wrongful or improper.  No Covered Person, the Sponsor, the Delaware
Trustee, nor the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee
shall have the right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular investment or other
opportunity.  Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of Holders of, securities or
other obligations of the Sponsor or its Affiliates.





                                       40
<PAGE>   46
                                  ARTICLE XII
                                   ACCOUNTING

SECTION 12.1     Fiscal Year.

         The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code or the Treasury
Regulations.

SECTION 12.2     Certain Accounting Matters.

         (a)     At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust.  The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied.  The books of account and the records of the
Trust shall be examined by and reported upon as of the end of each Fiscal Year
of the Trust by a firm of independent certified public accountants selected by
the Regular Trustees.

         (b)     Within 60 days after May 15 of each year, the Property Trustee
shall provide to the Holders of the Trust Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act.  The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.

         (c)     The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Trust Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Trust Securities held by each Holder as is
required by the Code and the Treasury Regulations.  Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.

         (d)     The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return on form 1041 or other applicable form or statement under United
States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or
local taxing authority.

SECTION 12.3     Banking.

         The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Partnership Preferred Securities held by the Property Trustee
shall be made directly to the Property Account and no other funds of the Trust
shall be deposited in the Property Account.  The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Account.

SECTION 12.4     Withholding.

         The Regular Trustees shall cause the Trust to comply with all
withholding requirements under United States federal, state and local law.  The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations.  The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions.  To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder.  In the event of any





                                       41
<PAGE>   47
claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction.  If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.  Notwithstanding anything
herein to the contrary, the Regular Trustees shall cause the Trust, absent
receipt of an opinion of nationally recognized tax counsel to the contrary, to
withhold thirty percent (30%) (or such other rate as may be imposed as a result
of an amendment to the Code or such lower rate as may be imposed under an
applicable income tax treaty) on the gross amount of any Distributions on Trust
Preferred Securities held by a Holder that is not a "United States person"
within the meaning of Section 7701(a)(30) of the Code.


                                  ARTICLE XIII
                            AMENDMENTS AND MEETINGS

SECTION 13.1     Amendments.

         (a)     Except as otherwise provided in this Declaration or by any
applicable terms of the Trust Securities, this Declaration may only be amended
by a written instrument approved and executed by the Regular Trustees (or, if
there are more than two Regular Trustees a majority of the Regular Trustees) ,
the Property Trustee and the Delaware Trustee;

         (b)     No amendment shall be made, and any such purported amendment
shall be void and ineffective:

                 (i)      unless, in the case of any proposed amendment, the
         Property Trustee and the Delaware Trustee shall have first received an
         Officers' Certificate from each of the Trust and the Sponsor that such
         amendment is permitted by, and conforms to, the terms of this
         Declaration (including the terms of the Trust Securities);

                 (ii)     unless, in the case of any proposed amendment which
         affects the rights, powers, duties, obligations or immunities of the
         Property Trustee or the Delaware Trustee, the Property Trustee or the
         Delaware Trustee, as the case may be, shall have first received an
         opinion of counsel (who may be counsel to the Sponsor or the Trust)
         that such amendment is permitted by, and conforms to, the terms of
         this Declaration (including the terms of the Trust Securities); and

                 (iii)    to the extent the result of such amendment would be
         to:

                          (A)       cause the Trust to be classified for
                 purposes of United States federal income taxation as an
                 association or a publicly traded partnership taxable as a
                 corporation;

                          (B)       cause the Partnership to be classified for
                 purposes of United States federal income tax as an association
                 or a publicly traded partnership taxable as a corporation;

                          (C)       reduce or otherwise adversely affect the
                 powers of the Property Trustee in contravention of the Trust
                 Indenture Act; or

                          (D)       cause the Trust to be deemed to be an
                 Investment Company required to be registered under the 1940
                 Act.

         (c)     In the event the consent of the Property Trustee, as the
Holder of the Partnership Preferred Securities is required under the Limited
Partnership Agreement with respect to any amendment, modification or
termination of the Limited Partnership Agreement or the Partnership Preferred
Securities the Property Trustee shall request the direction of the Holders of
the Trust Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however, that where a





                                       42
<PAGE>   48
consent under the Limited Partnership Agreement would require the consent of a
Super Majority of the Holders of Partnership Preferred Securities the Property
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Trust Securities which the relevant
Super Majority represents of the aggregate liquidation amount of the
Partnership Preferred Securities outstanding; provided, further, that the
Property Trustee shall not be obligated to take any action in accordance with
the directions of the Holders of the Trust Securities under this Section
13.1(c) unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that as a result of such action, the Trust will not be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes;

         (d)     At such time after the Trust has issued any Trust Securities
that remain outstanding, any amendment that would (i) adversely affect the
powers, preferences or special rights of the Trust Securities or (ii) provide
for the dissolution, winding-up or termination of the Trust other than pursuant
to the terms of this Declaration, may be effected only with the approval of the
Holders of at least a Majority in liquidation amount of the Trust Securities
affected thereby; provided, that if any amendment or proposal referred to in
clause (i) hereof would adversely affect only the Trust Preferred Securities or
the Trust Common Securities, then only the affected class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a Majority in liquidation amount of such
class of Trust Securities;

         (e)     Section 11.1(c) and this Section 13.1 shall not be amended
without the consent of all of the Holders of the Trust Securities;

         (f)     Article V shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Trust Common Securities;

         (g)     The rights of the Holders of the Trust Common Securities under
Article VI to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Trust Common Securities; and

         (h)     Notwithstanding Section 13.1(c), this Declaration may be
amended without the consent of the Holders of the Trust Securities:

                 (i)      to cure any ambiguity;

                 (ii)     to correct or supplement any provision in this
         Declaration that may be defective or inconsistent with any other
         provision of this Declaration;

                 (iii)    to add to the covenants, restrictions or obligations
         of the Sponsor;

                 (iv)     to conform to any change in the 1940 Act or written
         change in interpretation or application of the rules and regulations
         promulgated thereunder by any legislative body, court, government
         agency or regulatory authority;

                 (v)      to conform to any change in the Trust Indenture Act
         or written change in interpretation or application of the rules and
         regulations promulgated thereunder by any legislative body, court,
         government agency or regulatory authority; and

                 (vi)     to modify, eliminate and add to any provision of this
         Declaration to such extent as may be necessary;

         provided that such amendments do not have a material adverse effect on
         the rights, preferences or privileges of the Holders.





                                       43
<PAGE>   49
SECTION 13.2     Meetings of the Holders of Trust Securities; Action by Written
                 Consent.

         (a)     Meetings of the Holders of any class of Trust Securities may
be called at any time by the Regular Trustees (or as provided in the terms of
the Trust Securities) to consider and act on any matter on which Holders of
such class of Trust Securities are entitled to act under the terms of this
Declaration, the terms of the Trust Securities, the Limited Partnership
Agreement, the rules of any stock exchange on which the Trust Preferred
Securities are listed or admitted for trading, the Business Trust Act or other
applicable law.  The Regular Trustees shall call a meeting of the Holders of
such class if directed to do so by the Holders of at least 10% in liquidation
amount of such class of Trust Securities.  Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Trust Securities wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called.  Any
Holders of Trust Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Trust Securities exercising the right to
call a meeting and only those Trust Securities specified shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met.

         (b)     Except to the extent otherwise provided in the terms of the
Trust Securities, the following provisions shall apply to meetings of Holders
of Trust Securities:

                 (i)      notice of any such meeting shall be given to all the
         Holders of Trust Securities having a right to vote thereat at least 7
         days and not more than 60 days before the date of such meeting.  Any
         action that may be taken at a meeting of the Holders of Trust
         Securities may be taken without a meeting if a consent in writing
         setting forth the action so taken is signed by the Holders of Trust
         Securities owning not less than the minimum amount of Trust Securities
         in liquidation amount that would be necessary to authorize or take
         such action at a meeting at which all Holders of Trust Securities
         having a right to vote thereon were present and voting.  Prompt notice
         of the taking of action without a meeting shall be given to the
         Holders of Trust Securities entitled to vote who have not consented in
         writing.  The Regular Trustees may specify that any written ballot
         submitted to the Holder for the purpose of taking any action without a
         meeting shall be returned to the Trust within the time specified by
         the Regular Trustees;

                 (ii)     each Holder of a Trust Security may authorize any
         Person to act for it by proxy on all matters in which a Holder of
         Trust Securities is entitled to participate, including waiving notice
         of any meeting, or voting or participating at a meeting.  No proxy
         shall be valid after the expiration of 11 months from the date thereof
         unless otherwise provided in the proxy.  Every proxy shall be
         revocable at the pleasure of the Holder of Trust Securities executing
         it.  Except as otherwise provided herein, all matters relating to the
         giving, voting or validity of proxies shall be governed by the General
         Corporation Law of the State of Delaware relating to proxies, and
         judicial interpretations thereunder, as if the Trust were a Delaware
         corporation and the Holders of the Trust Securities were shareholders
         of a Delaware corporation;

                 (iii)    each meeting of the Holders of the Trust Securities
         shall be conducted by the Regular Trustees or by such other Person
         that the Regular Trustees may designate; and

                 (iv)     unless the Business Trust Act, this Declaration, the
         terms of the Trust Securities, the Trust Indenture Act or the listing
         rules of any stock exchange on which the Trust Preferred Securities
         are then listed for trading, otherwise provide, the Regular Trustees,
         in their sole discretion, shall establish all other provisions
         relating to meetings of Holders of Trust Securities, including notice
         of the time, place or purpose of any meeting at which any matter is to
         be voted on by any Holders of Trust Securities, waiver of any such
         notice, action by consent without a meeting, the establishment of a
         record date, quorum requirements, voting in person or by proxy or any
         other matter with respect to the exercise of any such right to vote.





                                       44
<PAGE>   50
                                  ARTICLE XIV
                      REPRESENTATIONS OF PROPERTY TRUSTEE
                              AND DELAWARE TRUSTEE

SECTION 14.1     Representations and Warranties of Property Trustee.

         The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:

         (a)     The Property Trustee is a New York banking corporation with
trust powers, duly organized, validly existing and in good standing under the
laws of the State of New York, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, the
Declaration;

         (b)     The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee.  The Declaration has been duly
executed and delivered by the Property Trustee;

         (c)     The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Incorporation or By-laws of the Property Trustee;

         (e)     The Property Trustee, pursuant to this Declaration, shall hold
legal title to, and a valid ownership interest on behalf of the Holders of the
Trust Securities, in the Partnership Preferred Securities and agrees that,
except as expressly provided or contemplated by this Agreement, it will not
create, incur or assume, or suffer to exist any mortgage, pledge,
hypothecation, encumbrance, lien or other charge or security interest upon the
Partnership Preferred Securities.

SECTION 14.2     Representations and Warranties of Delaware Trustee.

         The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:

         (a)     The Delaware Trustee is a Delaware corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with power and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, the Declaration;

         (b)     The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration.

         (c)     The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.


                                   ARTICLE XV
                                 MISCELLANEOUS

SECTION 15.1     Notices.

         All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:





                                       45
<PAGE>   51
         (a)     If given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Trust Securities):

                          Enron Capital Trust II
                          c/o Enron Corp.
                          1400 Smith Street
                          Houston, TX  77002
                          Attention: Treasury Department

         (b)     If given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of
to the other Trustees):

                          Chase Manhattan Bank Delaware
                          1201 Market Street
                          Wilmington, DE  19801
                          Attention:  Global Trust Services

         (c)     If given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of
to the Holders of the Trust Securities and the other Trustee):

                          The Chase Manhattan Bank
                          450 West 33rd Street, 15th Floor
                          New York, NY  10001
                          Attention:  Global Trust Services

         (d)     If given to the Holder of the Trust Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Trust Common Securities may give notice of to the Trust):

                          Enron Corp.
                          1400 Smith Street
                          Houston, TX  77002
                          Attention:  Treasury Department

         (e)     if given to any other Holder, at the address set forth on the
books and records of the Trust.

         All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

SECTION 15.2     Governing Law.

         This Declaration and the rights of the parties hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws, except that the rights, duties and
remedies of the Property Trustee hereunder shall be governed by the internal
laws of the State of New York without regard to principles of conflict of laws.





                                       46
<PAGE>   52
SECTION 15.3     Intention of the Parties.

         It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust.  The
provisions of this Declaration shall be interpreted to further this intention
of the parties.

SECTION 15.4     Headings.

         Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.

SECTION 15.5     Successors and Assigns

         Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.

SECTION 15.6     Partial Enforceability.

         If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.

SECTION 15.7     Counterparts.

         This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees and a duly authorized officer of the Sponsor
to one of such counterpart signature pages.  All of such counterpart signature
pages shall be read as though one, and they shall have the same force and
effect as though all of the signers had signed a single signature page.





                                       47
<PAGE>   53
         IN WITNESS WHEREOF, each of the undersigned has caused these presents
to be executed as of the day and year first above written.





                                        /s/ Phillip M. Sisneros               
                                        --------------------------------------
                                        Name: Phillip M. Sisneros
                                        Title: Regular Trustee
                                        
                                        
                                        
                                        /s/ Susan K. Hodge                    
                                        --------------------------------------
                                        Name: Susan K. Hodge
                                        Title: Regular Trustee
                                        
                                        
                                        /s/ Keith A. Crane                    
                                        --------------------------------------
                                        Name: Keith A. Crane                  
                                        Title: Regular Trustee
                                        
                                        
                                        Chase Manhattan Bank Delaware,
                                        as Delaware Trustee
                                        
                                        
                                        
                                        By:  /s/ John J. Cashin               
                                           -----------------------------------
                                             John J. Cashin
                                             Senior Trust Officer
                                        
                                        The Chase Manhattan Bank, as Property 
                                          Trustee
                                        
                                        
                                        
                                        By:  /s/ R. J. Halleran               
                                           -----------------------------------
                                             R. J. Halleran
                                             Second Vice President
                                        
                                        Enron Corp., as Sponsor
                                        
                                        
                                        
                                        By:  /s/ William D. Gathmann          
                                           -----------------------------------
                                             William D. Gathmann
                                             Vice President, Finance and
                                             Treasurer
                                        
                                        
                                        


                                       48
<PAGE>   54
                                  EXHIBIT A-1

                     FORM OF PREFERRED SECURITY CERTIFICATE


      This Trust Preferred Security is a Global Certificate within the meaning
of the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Trust Preferred Security is exchangeable for Trust Preferred Securities
registered in the name of a person other than the Depositary or its nominee
only in the limited circumstances described in the Declaration and no transfer
of this Trust Preferred Security (other than a transfer of this Trust Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.

      Unless this Trust Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York), a New York corporation, to the Trust or its agent for registration of
transfer, exchange or payment, and any Trust Preferred Security issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depositary and any payment hereon is made to
Cede & Co. or such other entity as is requested by an authorized representative
of the Depositary, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.





                                     A-1-1
<PAGE>   55
TP-1                                                               [           ]

                                                             CUSIP NO. 29357P201

               Certificate Evidencing Trust Preferred Securities

                                       of

                             ENRON CAPITAL TRUST II


                       8 1/8% Trust Preferred Securities
             (liquidation amount $25 per Trust Preferred Security)

      ENRON CAPITAL TRUST II, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of __________ preferred securities of the
Trust representing undivided beneficial ownership interests in the assets of
the Trust designated the 8 1/8% Trust Preferred Securities (liquidation amount
$25 per Trust Preferred Security) (the "Trust Preferred Securities").  The
Trust Preferred Securities are freely transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer.  The designation,
rights, powers, privileges, restrictions, preferences and other terms and
provisions of the Trust Preferred Securities represented hereby are set forth
in, issued under and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust dated as of January 13, 1997, as the
same may be amended from time to time (the "Declaration").  Capitalized terms
used herein but not defined shall have the meaning given them in the
Declaration.  The Holder is entitled to the benefits of the Trust Preferred
Securities Guarantee to the extent provided therein.  Each Holder of a Trust
Preferred Security, by acceptance of this Certificate and each Certificate
owner, by acquisition of a beneficial interest in a Certificate, agrees to
treat the Initial Debentures, and any other Affiliate Investment Instruments
that are treated as debt instruments by the relevant Investment Affiliate and
by the Partnership, as indebtedness for United States federal income tax
purposes.  The Sponsor will provide a copy of the Declaration, the Trust
Preferred Securities Guarantee and the Limited Partnership Agreement to a
Holder without charge upon written request to the Trust at its principal place
of business.

      Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.

      IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day
of __________, _____.

                                        ENRON CAPITAL TRUST II
                                        
                                        
                                                                              
                                        --------------------------------------
                                        Name:  
                                              -------------------,
                                               as Regular Trustee

                         CERTIFICATE OF AUTHENTICATION

      This is the Trust Preferred Security described in the within-mentioned
Declaration.

                                        THE CHASE MANHATTAN BANK, as Trustee

                                        By:
                                            -----------------------------------
                                                   Authorized Signatory

                       (See reverse for additional terms)





                                     A-1-2
<PAGE>   56
                             [REVERSE OF SECURITY]

      Holders of Trust Preferred Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of 8 1/8% of the stated
liquidation amount of $25 per Trust Preferred Security.  Distributions on the
Trust Preferred Securities shall, from the date of original issue, accrue and
be cumulative and shall be payable quarterly only to the extent that the Trust
has funds available for the payment of such distributions in the Property
Account.  Distributions not paid on the scheduled payment date will accumulate
and compound quarterly (to the extent permitted by applicable law) at the rate
of 8 1/8% per annum.  The term "Distributions" as used herein shall mean
ordinary cumulative distributions in respect of each Fiscal Period together
with any such Compounded Distributions.  Amounts available to the Trust for
distribution to the holders of the Trust Preferred Securities will be limited
to payments received by the Trust from the Partnership on the Partnership
Preferred Securities or from the Company on the Partnership Guarantee.
Distributions on the Partnership Preferred Securities will be paid only if, as
and when declared in the sole discretion of the Company, as the General Partner
of the Partnership.  If and to the extent that the Partnership makes a
distribution on the Partnership Preferred Securities held by the Property
Trustee or the Company makes a payment under the Partnership Guarantee (the
amount of any such partnership distribution, including any compounded
partnership distributions or guarantee payment being a "Payment Amount"), the
Trust shall and the Property Trustee is directed, to the extent funds are
available for that purpose, to make a Pro Rata Distribution of the Payment
Amount to Holders.

      The amount of Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly Distribution
period on the basis of the actual number of days elapsed in a 90-day quarter.

      Except as otherwise described herein, distributions on the Trust
Preferred Securities will be cumulative, will accrue from the date of initial
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on March 31, 1997 if, as
and when available for payment by the Property Trustee.  If the Trust Preferred
Securities (or, if the Trust is liquidated, the Partnership Preferred
Securities) are in book-entry-only form, Distributions will be payable to the
Holders of record of Trust Preferred Securities as they appear on the books and
records of the Trust on the relevant record dates, which will be one Business
Day prior to the relevant payment dates.  If the Trust Preferred Securities
(or, if the Trust is liquidated, the Partnership Preferred Securities) do not
remain in book-entry only form, the relevant record dates shall be the 15th day
of the month of the relevant payment dates.  In the event that any date on
which distributions are payable is not a Business Day, payment of such
Distribution shall be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day (without any
reduction of interest or other payments in respect of such early payment).
Payments of accrued Distributions will be payable to Holders of record of Trust
Preferred Securities as they appear on the books and records of the Trust on
the record date with respect to the payment date for the Trust Preferred
Securities which corresponds to the payment date fixed by the Partnership with
respect to the payment of cumulative distributions on the Partnership Preferred
Securities.

      The Trust Preferred Securities shall be redeemable as provided in the
Declaration.





                                    A-1-3

<PAGE>   57
                            ---------------------


                                  ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Preferred
Security Certificate to:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
        (Insert assignee's social security or tax identification number)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                   (Insert address and zip code of assignee)


and irrevocably appoints

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
agent to transfer this Trust Preferred Security Certificate on the books of the
Trust.  The agent may substitute another to act for him or her.


Date: 
      -----------------------
Signature: 
           ------------------


      (Sign exactly as your name appears on the other side of this Trust
                       Preferred Security Certificate)





                                     A-1-4
<PAGE>   58
                                  EXHIBIT A-2

                      FORM OF COMMON SECURITY CERTIFICATE

CS-1                                                             [             ]

                 Certificate Evidencing Trust Common Securities

                                       of

                             ENRON CAPITAL TRUST II


                         8 1/8% Trust Common Securities
               (liquidation amount $25 per Trust Common Security)

      ENRON CAPITAL TRUST II, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that Enron Corp., a
Delaware corporation (the "Holder") is the registered owner of ____________
common securities of the Trust representing undivided beneficial ownership
interests in the assets of the Trust designated the 8 1/8% Trust Common
Securities (liquidation amount $25 per Trust Common Security) (the "Trust
Common Securities").  The designation, rights, powers, privileges,
restrictions, preferences and other terms and provisions of the Trust Common
Securities represented hereby are set forth in, issued under and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust dated as of January 13, 1997, as the same may be amended from time to
time (the "Declaration").  Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration.  The Holder is entitled to the
benefits of the Trust Common Securities Guarantee to the extent provided
therein.  Each Holder of a Trust Common Security, by acceptance of this
Certificate, agrees to treat the Initial Debentures, and any other Affiliate
Investment Instruments that are treated as debt instruments by the relevant
Investment Affiliate and by the Partnership, as indebtedness for United States
federal income tax purposes.  The Sponsor will provide a copy of the
Declaration, the Trust Common Securities Guarantee and the Limited Partnership
Agreement to a Holder without charge upon written request to the Sponsor at its
principal place of business.   THE TRUST COMMON SECURITIES ARE TRANSFERABLE ON
THE BOOKS AND RECORDS OF THE TRUST ONLY IN ACCORDANCE WITH THE TERMS OF THE
DECLARATION.

      Upon receipt of this certificate, the Sponsor is bound by the Declaration
and is entitled to the benefits thereunder.

      IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of ________, _____.

                                        ENRON CAPITAL TRUST II
                                        
                                        
                                                                              
                                        ---------------------------------------
                                                          ,
                                        ------------------
                                        as Regular Trustee

                         CERTIFICATE OF AUTHENTICATION

      This is the Trust Common Security described in the within-mentioned
Declaration.

                                        THE CHASE MANHATTAN BANK, as Trustee
                                        
                                        By:
                                            -----------------------------------
                                                     Authorized Signatory

                       (See reverse for additional terms)





                                     A-2-1
<PAGE>   59
                         [FORM OF REVERSE OF SECURITY]

      Holders of Trust Common Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of 8 1/8% of the stated
liquidation amount of $25 per Trust Common Security.  Distributions on the
Trust Common Securities shall, from the date of original issue, accrue and be
cumulative and shall be payable quarterly only to the extent that the Trust has
funds available for the payment of such distributions in the Property Account.
Distributions not paid on the scheduled payment date will accumulate and
compound quarterly (to the extent permitted by applicable law) at the rate of 8
1/8% per annum.  The term "Distributions" as used herein shall mean ordinary
cumulative distributions in respect of each Fiscal Period together with any
such Compounded Distributions. Amounts available to the Trust for distribution
to the holders of the Trust Common Securities will be limited to payments
received by the Trust from the Partnership on the Partnership Preferred
Securities or from the Company on the Partnership Guarantee.  Distributions on
the Partnership Preferred Securities will be paid only if, as and when declared
in the sole discretion of the Company, as the General Partner of the
Partnership.  If and to the extent that the Partnership makes a distribution on
the Partnership Preferred Securities held by the Property Trustee or the
Company makes a payment under the Partnership Guarantee (the amount of any such
partnership distribution, including any compounded partnership distributions or
guarantee payment being a "Payment Amount"), the Trust shall and the Property
Trustee is directed, to the extent funds are available for that purpose, to
make a Pro Rata Distribution of the Payment Amount to Holders.

      The amount of Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of a 360-day year of twelve
30-day months, and for any period shorter than a full quarterly Distribution
period on the basis of the actual number of days elapsed in a 90-day quarter.

      Except as otherwise described herein, distributions on the Trust Common
Securities will be cumulative, will accrue from the date of initial issuance
and will be payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing on March 31, 1997 if, as and when
available for payment by the Property Trustee.  Distributions will be payable
to the Holders of record of Trust Common Securities as they appear on the books
and records of the Trust on the relevant record dates, which will be one
Business Day prior to the relevant payment dates.  In the event that any date
on which distributions are payable is not a Business Day, payment of the
Distribution shall be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day (without any
reduction of interest or other payments in respect of such early payment).
Payments of accrued Distributions will be payable to Holders of record of Trust
Common Securities as they appear on the books and records of the Trust on the
record date with respect to the payment date for the Trust Common Securities
which corresponds to the payment date fixed by the Partnership with respect to
the payment of cumulative distributions on the Partnership Preferred
Securities.

      The Trust Common Securities shall be redeemable as provided in the
Declaration.





                                    A-2-2

<PAGE>   60
                            ---------------------


                                  ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust Common
Security Certificate to:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
        (Insert assignee's social security or tax identification number)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                   (Insert address and zip code of assignee)

and irrevocably appoints
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
agent to transfer this Trust Common Security Certificate on the books of the
Trust.  The agent may substitute another to act for him or her.

Date: 
      -----------------------
Signature: 
           ------------------

      (Sign exactly as your name appears on the other side of this Trust
                         Common Security Certificate)


                                       


                                     A-2-3